Mumbai: Pune-based, Bank of Maharashtra (BoM) has decided to exit from a proposed  joint venture (JV) with Shriram Financial Services and South Africa's Sanlam to form a new general insurance company. The public sector bank was to have 15 per cent stake in the general insurance entity.

According to the bank,  the terms of the joint venture could not be finalised as per it's requirement and hence BoM has opted out of the three-way joint venture.

According to reports, the dispute is said to revolve around lack of agreement over the price at which additional capital would be raised in the future. Bank of Maharashtra had been insistent on pre-fixing the premium for fresh capital infusion.

Moreover, while the agreement document had specified the price at which Sanlam would buy back shares from Shriram after the liberalisation of the sector, it did not specify the price it would offer the bank. Reports also say there were differences over the premium that BoM was required to pay for the venture.

In the proposed joint venture of  Rs100-crore between the three financial firms in December 2006, BoM was to acquire 15 per cent of the stake while Shriram Financial and Sanlam would acquire 59 per cent and 26 per cent respectively.

The joint venture had already received the preliminary nod from the Insurance and Regulatory Development Authority (Irda) and was supposed to start its operation by March.

Shriram and Sanlam have decided to go ahead with the venture. Following this, Shriram group has raised its stake from 59 per cent to 79 per cent in the non-life JV insurance with Sanlam of South Africa.

Currently BoM also has agency arrangement with United India Insurance for non-life and Life Insurance Corporation of India for life businesses.

Established in 1918, Sanlam is a leading financial services group in South Africa. It demutualised in 1998 and is listed on the JSE Securities Exchange in Johannesburg and on the Namibian Stock Exchange. The group recorded  353 billion rand in assets under management and administration in December 2005.