Andhra Bank and Bank of Baroda (BoB), both public sector entities have entered into a joint venture with their British Partner Legal & General to form a life insurance entity named IndiaFirst.

IndiaFirst life insurance is the 23rd player in the life insurance sector. The company has an equity capital of Rs. 3.3 billion with headquarters in Mumbai. BoB holds a 40 % stake while Andhra Bank has an equity stake of 30 %in the company. The remaining 26% is held by the British partner Legal and General. 26% is the maximum permissible limit in the sector.

With the Government declaring its no objection with PSBs entering into non banking sector, the banks have started spreading themselves in the arena of insurance and mutual funds.

The launch of the new company took place by the hands of Finance Minister, Mr. Pranab Mukherjee. Mr. Mukherjee said, "Insurance has huge market potential and insurance is a key area where we require more penetration and reach."

"The insurance sector has immense opportunity to grow not in terms of just providing life insurance, but also in its contribution to overall economic growth, by augmenting savings," he added.

"I hope this life insurance joint venture to penetrate in to hitherto uninsured areas in rural areas; it should also generate more business opportunities," Mukherjee said.

Bank of Baroda chairman and managing director MD Mallya, who will also be the chairman of the insurance company said that the bank will be distributing its insurance products of IndiaFirst through its 1, 150 branches.