Govt raises FDI cap in insurance to 49 percent | Firstpost

New Delhi: After allowing FDI in multi-brand?retail, the government today approved a hike in foreign?investment cap in insurance sector to 49 percent, meeting a?long standing demand of the industry and its regulator IRDA.

The Cabinet, headed by Prime Minister Manmohan Singh,?approved an amendment to the Insurance Laws (Amendment) Bill,?2008, that will raise the Foreign Direct Investment (FDI) in?the sector from 26 per cent to 49 percent.

P Chidambaram.

Announcing the decision taken by the Cabinet, Finance?Minister P Chidambaram said the amendments will be presented?in the ensuing Winter session of Parliament.

Chidambaram said though the Parliamentary Standing?Committee, headed by BJP Leader Yashwant Sinha, had?recommended retaining FDI cap at 26 percent, the government?went for the higher cap so as ?to meet the growing capital requirement of insurance companies?.

Max Life Insurance MD Rajesh Sud said, ?this would have?been an opportunity to allow foreign investors to participate?in the life insurance, since they are also a source of?long-term capital, particularly in view of potential IPOs of these companies?.

IRDA Chairman J Hari Narayan had yesterday pitched for?raising the FDI cap saying that the sector needed huge capital?for expansion.?The Cabinet also approved foreign re-insurers to open?branches only for re-insurance business in India.

Such?branches would be prohibited from investing directly or?indirectly outside India the funds of policyholder.?The amended bill has also pegged the capital requirement?of health insurance companies at Rs 50 crore as against Rs 100?crore for general insurers.

PTI

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Source: http://www.firstpost.com/economy/govt-raises-fdi-cap-in-insurance-raised-to-49-percent-479984.html

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