HDFC Bank has agreed to buy a stake of up to 9.944% in Go Digit Life Insurance, for a consideration ranging between Rs500m ($6.2m) and Rs700m ($8.76m).

Under the indicative and non-binding term sheet, HDFC Bank will make the payment in two tranches by subscribing to equity shares of Go Digit Life Insurance.

Upon securing certificate of registration by Insurance Regulatory and Development Authority of India, Go Digit Life Insurance plans to undertake life insurance operations in the country.

Fairfax Financial Holdings-backed Go Digit General Insurance recently submitted draft documents for an initial public offering (IPO), with market regulator Securities and Exchange Board of India (SEBI).

Last year, Go Digit General Insurance was ordered by IRDAI to cease product offering life insurance benefits as well as to suspend all advertisements for the product, as per a Press Trust of India report.

Currently, Go Digit offers products in the travel, motor, property and health insurance segments. The products are offered under the brand name Go Digit General Insurance.

In May 2021, HDFC said it would reduce its shareholding in general insurance subsidiary HDFC Ergo to below 50% to meet regulatory norms.

The deal involved sale of over 4.4 million shares to foreign JV partner Ergo International, at INR10 apiece.