Mumbai: Dena Bank and Om Kotak Mahindra Life Insurance Company (OMKM) has announced a strategic alliance for bancassurance for Indian consumers. The mutually exclusive referral arrangement will make available the entire range of OMKM's life insurance products through the extensive branch network of Dena Bank.

A memorandum of understanding (MOU) was signed in Mumbai earlier by Dena Bank chairman and managing director A G Joshi and OMKM managing director Shivaji Dam.

Recording a first in the Indian insurance sector, the OMKM-Dena Bank alliance is mutually exclusive. As such, OMKM will not have any such agreement with another public sector or private sector bank, with the exception of Kotak Bank, which is their group company. Similarly, Dena Bank will not have a similar agreement with any other life insurance company in India.

Under the arrangement, the bank will refer its customers to OMKM for selling their life insurance and pension products, for which the bank will earn a referral fee. Participation by the bank's customers will be purely on a voluntary basis.

Says Dam: ''Om Kotak will benefit substantially from Dena Bank's extensive network and customer loyalty. The exclusive nature of our agreement reflects the commitment of each partner to the alliance. OMKM's focus area is the western region and it may be noted that 60 per cent of Dena Bank's business comes from this area. We expect at least 10 per cent of our business this year to come from this alliance.''

Adds Joshi: ''We are looking forward to extending the suite of services we offer our customers. We recognise that life insurance is a must for every citizen of the country and OMKM's customised products are ideal for our consumers. With respect to our focus, we believe that Dena Bank and OMKM's strengths lie in the same direction.''

The referral arrangement will commence with immediate effect, initially through 60 select branches of the bank mostly in the west (25 in Mumbai-Thane, 25 in Gujarat and 10 in New Delhi). The number of branches will increase gradually.

Having successfully achieved a turn-around in just one year, Dena Bank continued to register still better working results. The bank posted a net profit of Rs 25.04 crore for the quarter ended December 2002 as against a loss of Rs 1.09 crore during the corresponding quarter last year. The net profit for the first nine months has been Rs 37.03 crore as against a profit of Rs 11.36 crore for the last full year. The operating profit also increased to Rs 270.20 crore for the first nine months, showing an increase of 30.48 per cent over the corresponding period last year.

The bank has been successful in reducing its gross non-performing assets (NPAs) from Rs 1996.02 crore as of 31 March 2002 to Rs 1758.75 crore in December 2002. The provision as a ratio of gross NPAs has been improved further from 35.76 per cent in March 2002 to 39.56 per cent in December 2002. The bank, which has made considerable advancement in technology, has recently launched an international debit card.

OMKM, which was launched in Mumbai in May 2001 with three products, now offers a total of 12 products, including eight individual plans, three group insurance products and one product, aimed at the rural market. These products are available with combinations of six attractive riders. OMKM is a joint venture between Kotak Mahindra Finance and Old Mutual plc.