UBI to leverage credit portfolio to bring earn commissions

Our Banking Bureau
25 February 2003

Chennai: Union Bank of India (UBI), the first public sector bank to secure the corporate insurance agency licence, is all set to leverage its credit portfolio to bring earn commissions.

UBI chairman and managing director V Leeladhar says his bank has a credit portfolio of Rs 22,465 crore. Of that, Rs 19,000 is insurable credit — that is, secured loans.

“Our target is to insure at least 20 per cent of that,“ he adds. Compared to selling life insurance policies, public sector banks are better positioned to increase their other income by selling general insurance policies.

Though Leeladhar says UBI will not force its borrowers to take insurance policies through the bank, what will practically happen is the debiting of the latter's account with the fire-and-burglary insurance premium as part of the loan agreement.

Apart from insuring the asset against which the loan is sanctioned, the bank also gets a strong opportunity to sell other insurance covers like transit insurance.

UBI is the corporate agent for New India Assurance Company, the leading non-life insurer, and HDFC Standard Insurance, a private life insurance company. Till date the bank has sold around 7,000 life insurance policies for HDFC Standard Life.