In an attempt to cater to its customer base of micro, small and medium Enterprises (MSME), United Bank of India (UBI) has signed a MoU with MetLife Insurance Company, a private life insurer.
The insurance cover is tailor-made to cover term loans and overdrafts on the accounts. UBI is very aggressive when it comes to lending to MSMEs and it aims at providing an array of products to its growing customer base. MetLife has declared profits in the last quarter. Mr. Relan said that as of now the company has collected a total premium amounting to Rs. 2100 Cr.
Such arrangements work well for the banks, insurance companies and the customers. While the insurance company gets access to a set of willing customers, the bank can then cover some of their risk as certain risk scenarios in which the customer may default get covered in these policies. The customer, by paying a small premium can ensure that in the event of certain unforeseen conditions does not have to share the burden of the loan. The premium rates on such policies are pretty low as they are usually covered under a group policy and only certain extreme eventualities are covered.
