The prospective merger of HDFC Standard Life Insurance Company Ltd with Max Life Insurance has raised several questions, as post the acquisition it will create biggest private sector insurance company.

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But, what is interesting in this acquisition is Axis Bank's five percent holding in Max Life Insurance. With this stake, Axis Bank may sell HDFC Standard Life Insurance's policies. 

According to a report by IANS, senior official of a private life insurer, said, "Axis Bank is the bancassurance partner for Max Life Insurance, like HDFC Bank for HDFC Standard Life".

Speaking about the speculations, Axis Bank's official spokesperson said to Zee Business, "We have a very productive relationship with Max Life over the years and look at this development positively. As a Bancassurance partner we are committed to deepening life insurance penetration in the country and would continue to be associated in distributing life insurance products. At an industry level, Bancassurance is in the process of transitioning to the Open Architecture regime. The Bank will continue to do what is beneficial, and of value, to our growing customer base"

Presently, HDFC Bank and Axis Bank are the top competitors in the banking space. 

As per the report, Deepak Parekh Chairman, HDFC with HDFC Bank and other banks as bancassurance partners for HDFC Standard Life and Axis Bank as a major distribution partner for Max Life, the proposed combined entity will have a strong bancassurance channel.

On Friday, both the entities, HDFC and Max Financial Services, said in a BSE filing that the Board of Directors of the Company at its meeting held on June 17, 2016, has approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination through a merger of Max Life Insurance Company Limited and Max Financial Services Limited into HDFC Standard Life Insurance Company Limited by way of a scheme of arrangement. The agreement provides for a mutually agreed exclusivity period for due diligence and discussions between the parties in relation to the proposed transaction.

Further, the report mentioned the Analjit Singh, Founder of the Max Group, has said that "First Max Life Insurance will merge with Max Financial Services - a listed entity. Then Max Financial Services will be merged with HDFC Standard Life which ultimately will become a listed company."

With this merger possibility, on Friday, the stock of Max Financial Services surged 20% intraday and settled at 10.3% gain.

Among the popular insurance mergers are Birla Sun Life Insurance, Bajaj Allianz.

(With IANS inputs)