The State Bank of India (SBI) is due to finalise joint venture terms with IAG in the next few weeks, with India’s largest lender set to make ripples in the local general insurance market.

SBI and IAG signed the joint venture deal in May and expect to begin operating by the new year. SBI holds a majority 74% stake in the venture with IAG holding the maximum 26% foreign investment limit allocated to insurers under Indian law.

SBI Chairman OP Bhatt told the Rupee Times the venture “is at the final stages and we are seeking Reserve Bank of India approval”.

An IAG spokesman told insuranceNEWS.com.au today that while no formal announcement has yet been made by IAG, “exclusive negotiations with the State Bank of India in relation to setting up a general insurance joint venture are progressing well”.

“We expect the joint venture to commence trading in 2009,” she said. “IAG will advise the market as soon as a binding agreement has been signed between the two organisations.”