State Bank of India (SBI) has entered into a Memorandum of Understanding (MoU) with Insurance Australia Group (IAG) of Australia for its proposed expansion into the General Insurance business. The group plans to commence the business in the current financial year. SBI is India's largest bank in terms of assets. The bank has recently crossed 10,000 branch milestone in the country.

Under the deal, SBI proposes to hold a 74 per cent stake in the joint venture with IAG the remaining 26 per cent, subject to regulatory approvals. SBI already has a life insurance joint venture with a BNP Paribas.

SBI is the leader in the Indian banking sector, with over 100 million customers and 10,000+ branches across the country.

IAG is an international general insurance group with operations in Australia, New Zealand, Thailand, Malaysia, China, Singapore and UK through various brands. Its current businesses underwrite more than Australian Dollars 7.5 billion of premium per annum. It employs more than 16,000 personnel, out of which around 11,000 are in Australia.

If the proposed joint venture gets regulatory approval the officials expect to start business activity in early 2009.