For assessment of risks, it is actually based on local experience. A foreign partner brings in expertise in pricing of the risk. We can do that on our own,' Sivaraman said.

According to him, though there are talks about the Indian general insurance sector moving towards consolidation, buying out the stakes of existing promoters did not enthuse Larsen and Toubro.

'The foreign promoters of Indian general insurance companies are here for the long run. Further, an existing company may come with a baggage which we do not want.'

The non-life insurance company is expected to start business in 2010.

About floating a bank, Sivaraman said: 'There are relative advantages of having an NBFC and a bank.'

'There are two agendas for holding a stake in a bank. The first one is to have a share in the business. The second is the availability of banking services to our trade partners in opening letters of credit and other banking products.'

The lending portfolio of Larsen and Toubro's two NBFCs at the end of last fiscal stood at around Rs.7,500 crore, which is expected to grow this year.

L&T Finance will also raise Rs.1,000 crore through issue of non-convertible debentures for business deployment.