Barely a month before its scheduled Rs 200 crore (Rs 2 billion) initial public offering, UCO Bank on Monday signed a memorandum of understanding with the Life Insurance Corporation of India to market the latter's insurance schemes from its branches.
"Our endeavour is not only for selling products, but to go for a strategic alliance with LIC," UCO Bank chairman and managing director V P Shetty said after signing the MoU in Kolkata.
The tie-up was aimed at providing value added services in the form of life insurance products to over 2 crore (20 million) customers of UCO.
LIC chairman S B Mathur said things were really happening with the opening up of the insurance sector, and achieving and retaining customers was high on the agenda.
With interest margins coming down and costs rising, increasing fee-based income had become important for both the banks and insurance companies, he said.
Mathur said it was a win-win situation for both LIC and UCO Bank. It was more critical considering that PSU had become a kind of dirty word related with inefficiency, absence of work culture, but what has happened in UCO and LIC during the last few years, had helped changed that notion.
Shetty said, "Our interest income is dwindling and to compensate for this we had to resort to other avenues like this to increase fee-based income."