Public sector lender, Indian Bank has decided to venture into insurance business too. The bank will enter into partnership with a foreign insurer and with this marking its entry into the list of other lenders already in the business.

According to Chairman and Managing Director of the bank, TM Bhasin, the bank plans to form tie up with foreign insurer in such a way that the latter will have proposed 26% stake. Also a local bank will be partnered with thereby forming a three way partnership.

Bhasin said that the local bank and Indian Bank together will hold 74% stake. A decision in this matter will be taken in six months, he added.

"We are now seeking support and help from an external consultant to guide us in this path," Mr Bhasin said.

Talking about the prospective profitability in this venture, he said, "Yes, it would increase the bank's revenue. In fact, we are planning to bring in these advisors to guide us on price negotiations."

"The Insurance Regulatory and Development Authority (Irda) had ushered in a number of changes in 2010, which transformed the industry as a whole. So banks are seeing a huge opportunity here," said a banking analyst.