State-run Bank of India is looking to raise Rs 1,000-1,200 crore by selling its entire 28.96 percent stake in life insurance joint venture, Star Union Dai-Ichi Life Insurance, a source has said.


The bank will soon float a request for proposal for exiting the JV company, the source added.


Star Union Dai-ichi Life Insurance, which commenced operations in February 2009, is a joint venture between Bank of India, Union Bank of India and the Japanese major Dai-ichi Life Insurance Company.


The company has negligible market share in the 24-player industry dominated by the national insurer LIC.


While BoI owns 28.96 percent in the JV, UBI holds 25.10 percent, and Dai-chi is the single largest shareholder with 45.94 percent stake.


"The bank wants to completely exit from this life insurance joint venture. It is looking to raise Rs 1,000-1,200 crore through the process," the source told PTI.


The lender has also written to the Japanese partner asking if it would be interested in increasing stake in the company, the source added.


As per the current norms, foreign direct investment in insurance sector is capped at 49 percent.


In June 2016, the bank sold an 18 percent stake in the life insurance arm to Dai-ichi Life for Rs 540 crore.


The money, as and when the stake sale happens, will help the bank, which is under the prompt corrective action framework of the Reserve Bank, to improve its capital position.


The bank had earlier planned to raise around Rs 800 crore by selling stake in some of its other non-core assets– STCI Finance and Sidbi. It holds 29.96 percent stake in STCI Finance, while it owns 2.84 percent in Sidbi.


The lender, however, could not get the right price for these assets owing to the liquidity crisis in the NBFC sector following default by IL&FS, according to a person familiar to the deals.