State Bank of India and Insurance Australia Group have signed a non-binding agreement to enter into exclusive negotiations to form a general insurance joint venture in India later in 2008.

The terms of the joint venture are yet to be finalised. Once the binding agreement is signed, it will be subject to regulatory and other applicable approvals. The joint venture, if approved, is expected to commence writing business in 2009.

Insurance Australia Group (IAG) intends to fund the joint venture using its internal resources.

Michael Hawker, IAG’s CEO, said: Forming a general insurance partnership in India with a premier partner such as SBI, the largest bank in the country, is a significant step in IAG’s Asian expansion strategy.

Deepak Chawla, deputy managing director in charge of corporate strategy and new business initiatives at State Bank of India, added: Establishing a general insurance joint venture is a key element of SBI’s strategy to pursue emerging, high growth opportunities to build on our position as the pre-eminent financial services group in India.