Global banking giant HSBC has signed an agreement through which its Asia Pacific insurance arm will form an insurance joint venture in India with Bangalore-based Canara Bank, and New-Delhi-based Oriental Bank of Commerce, Reuters has reported.

According to Reuters, Canara’s chairman has claimed that, while HSBC would hold a 26% stake in the joint venture, state-owned Canara Bank would hold 51% and Oriental Bank of Commerce (OBC) would hold the remaining 23%. The publication also reported that the joint venture would have access to an India-wide customer base of over 40 million. has reported that the proposed life insurance company will be capitalized at INR2 billion; INR520 million of which is expected to be provided by HSBC. Canara Bank will reportedly provide INR1.02 billion, with OBC providing the remaining INR460 million.

This is a unique opportunity to expand HSBC’s footprint in one of our major emerging markets, David Fried, regional head for insurance, Asia Pacific at HSBC, commented, cited by Indiainfoline. The financial services industry in India has seen remarkable development over the past few years and life insurance has been a key part of that success story.

According Reuters, since the life insurance market was opened to private firms in 1999, premium incomes in India have grown at an annual rate of 21%. The news provider added that, with a relatively low penetration rate of 2.5% in 2005, the Indian insurance market will offer significant growth potential looking forward.