MUMBAI: IDBI Bank, Federal Bank and Fortis are set to infuse Rs 250 crore in their three-way insurance joint venture — IDBI Fortis Life
Insurance.

The contribution of each of the three entities will be in proportion to their stakeholding in the venture. People familiar with the development said the capital infusion will help IDBI Fortis in meeting solvency requirements and expanding operations.

Currently, IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each. Under current solvency norms, every insurer needs to maintain an excess of the value of his assets over the amount of his liabilities by an amount stipulated by the Irda.

When asked about the development, GV Nageswara Rao, MD and CEO, IDBI Fortis Life Insurance, told ET: "The branch expansion drive is going on, and we would require funds for this purpose. There will be some capital infusion, but, at this point of time, we cannot reveal more details," he said.

IDBI Fortis plans to set up 100 branches across the country by the end of next financial year, and aims to recruit around 1,500 people. At present, the insurance firm has 31 branches apart from about 1,100 branches of IDBI Bank and Federal Bank, through which it distributes its products.

IDBI Fortis launched its operations in March 2008 with an initial capital of Rs 200 crore. It has raised over Rs 250 crore of first year annual premiums and sold about 62,000 policies. Mr Rao said IDBI Fortis is looking to expand its operations even as market conditions are challenging.

"The global meltdown has highly impacted most of the economies of the world, but India is still better placed. Customers are becoming averse to equity investments, and we have seen their choice shifting in favour of fixed returns," he said.