Bank of Baroda's life insurance joint venture with Andhra Bank and UK's Legal and General Group PLC will start operations from December, a top official said on Monday.

"We have got final approval from the insurance regulatory authority to start operations," Chairman and Managing Director MD Mallya told reporters.

Bank of Baroda has 44% in the JV, IndiaFirst Life Insurance Co Ltd, while Andhra Bank holds 30% and Legal and General the rest.

Life insurance penetration in India is about 4% of GDP, in terms of total premiums underwritten in a year, compared with 2.4% in China and about 13.5% in the UK.

The company is the latest in a string of tie-ups of foreign players and Indian institutions as global insurers seek to tap the under-penetrated market.

India's current laws cap foreign investment in insurance at 26% and prevents insurers from entering the stock market in the first 10 years of their operations in the country.

India's parliament is considering a law to raise the foreign-investment limit to 49%.

The initial paid-up capital of the insurance venture would be 2 billion rupees, Mallya said.

The founders plan to raise paid-up capital to 25 billion rupees in the next 10 years as the newly-formed firm expands operations, P Nandagopal, chief executive officer, IndiaFirst Life Insurance, said.

"Initially, we will target 5 crore (50 million) customers of the promoter banks," said Nandagopal.

The insurance venture would utilise the branch network of Bank of Baroda and Andhra Bank to promote its products, he said.

The banks combined have a branch network of 4,500 in India.

"We will be able to exploit the semi-urban and rural network of both the banks," Nandagopal said.

The initial product range would cover typical needs of savings, education and retirement followed by those of protection, wealth accmulation, health and group insurance plans, he said.

The lenders would end their arrangements with other Indian insurance companies to sell their products once IndiaFirst starts operations, they said.

Mallya said the bank has already terminated its arrangement with HDFC Standard Life Insurance, effective Nov. 1.

"We will be severing our relationship with Life Insurance Corp. of India. We're sorting out some issues before the launch of IndiaFirst," said RS Reddy, Andhra Bank's chairman and managing director.