According to a report in the online edition of the The Hindu Business Line, public sector Vijaya Bank has decided to completely pull out of the life insurance joint venture with Punjab National Bank and the Principal Financial Group (PFG) of the US.

According to the report, the move has jeopardised PFG''s proposal to enter the domestic life insurance market, because Reserve Bank of India guidelines require at least two banks are necessary in any joint venture.

The report quotes Vijaya Bank chairman and managing director Prakash P Mallya, as saying, "We are pulling out completely from the joint venture, since there is no financial benefit for Vijaya Bank in it."

Vijaya Bank, a minority stakeholder with a 12-per cent stake, which is said to have been apprehending being relegated to a passive investor in the Rs110-crore insurance venture, had sought a larger equity role and had offered to buy out Berger Paints'' 32 per cent stake in the joint venture.

However, its proposal is said to have met with resistance from PNB, which is believed retain its 30-per cent majority stake in the venture, in which Principal Financial holds 26 per cent

The report cites Mallya as saying, "Small stakes will not give us any big benefits," and "we are pulling out completely from all the joint ventures," implying the bank''s intention to also withdraw from Principal PNB Asset Management Company, where it holds a 5- per cent stake and the PNB Principal Insurance Advisory Company, in which it has a 19- per cent stake.