State Bank of India, a leading private sector lender has announced that it has clinched a pact with Insurance Australia Group (IAG) with the aim to form a new conglomerate which would cater to the general insurance business in the domestic market.

Under the terms of JV agreement, SBI will be the owner of 74 percent stake in the new entity, while the remaining 26 percent will be hold by IAG.

While commenting on the agreement, Mr. O P Bhatt said, "Insurance penetration in India is very low and the general insurance industry is expected to grow at a brisk rate of
15-20 per cent per annum over a period of next 10-years."

The sources close to the bank revealed that SBI, with its unique brand equity and extensive distribution network will be able to offer protection to the folks even in the widespread rural and semi-urban arenas throughout the country and help deepen the market.

With this foray, the bouquet of financial products offered by the SBI Group ensures its footprints in every arena of financial services, the statement said.

According to the reports, last week, the bank had received sanction from the Reserve Bank of India for a JV with European financial services group Societe Generale for providing custodial and related services in the country.

Some of the major players in the general insurance business in the country are United India Insurance, New India Assurance, Oriental Insurance and National Insurance.