A three-way life insurance joint venture between Canara Bank, HSBC and Oriental Bank of Commerce (OBC) started operations on Monday with a call by finance minister P Chidambaram to keep life insurance products simple to tap into the growing market in rural areas.

Called Canara HSBC Life Insurance Company, it is the 19th life insurer to commence business in the country.
Insurance penetration is low in India. There is enormous potential, given that a large segment of the economy lives in rural areas. However, to tap into this market, one needs to ensure that the products are simple to ensure that they are received better, Mr Chidambaram said.

PSU banks provide tremendous advantages as usually its the bank branch which has a close bond with the village community. Banks in rural areas thrive due to the trust they build with the villagers, he observed, adding that the three partners have an extensive network of branches.

Canara Bank chairman and managing director MBN Rao said that the life company was capitalised at Rs 325 crore, one of the highest for a start-up in the segment, while Oriental Bank of Commerce CMD Alok Mishra referred to the symbiotic relationship between banking and insurance.