NEW DELHI (TIP): State Bank of India  (SBI) on Thursday said it will dilute its stake in its general insurance venture SBI General to 49 percent in favour of its foreign partner, with the enactment of insurance legislation.

SBI General is a 74:26 joint venture between SBI and Insurance Australia Group (IAG) of Australia.

The Executive Committee of the Central Board (ECCB) “has on March 25, 2015 decided to initiate the necessary action as per JV agreement for dilution of SBI’s stake in SBI General Insurance from 76 percent to 51 percent…

“…with corresponding increase of stake of IAG from 26 percent to 49 percent, including appointment of a valuer to facilitate valuation and price discover,” the country’s largest bank said in a statement.

Earlier this month, Parliament had passed the Insurance Laws (Amendment) Bill, 2015 which seeks to increase foreign investment in private sector companies to 49 percent from existing 26 percent, among other things. The proposal to increase stake comes in the backdrop of capital requirement of the company.

“There will be a substantial capital requirement by next fiscal,” SBI General insurance deputy CEO Steve Hollow had said.

The company pegs a total premium of Rs 1,600 crore by March 2015 as compared to Rs 1,200 crore premium registered last year.