Insurance FDI Bill to be tabled in LS

The government would table an amendment to the insurance act to raise the ceiling on foreign direct investment (FDI) in the insurance sector to 49 per cent from the current 26 per cent in the winter session of Parliament.

The passage of the amendment would, however, depend on political consensus, said G C Chaturvedi, joint secretary in the ministry of finance.

Prime Minister Manmohan Singh had last week said reforms in the insurance and pension sectors are necessary for the development of a vibrant debt market, an essential ingredient in making available long-term resources to fund infrastructure. The government's plan to bring about amendments in various insurance acts assumes significance in this backdrop.

Apart from the Insurance Act of 1938, the government plans to amend the Life Insurance Corporation of India Act of 1956, The General Insurance Business Nationalisation Act of 1972 and the Insurance Regulatory and Development Authority Act of 1999, Chaturvedi said.

"Since FDI ceiling is part of the Insurance Act, the act will have to be amended (to allow foreign insurers to hold higher stakes in ventures in India)," said Chaturvedi on the sidelines of an insurance seminar.

The LIC Act would be amended to align the minimum paid-up capital required for LIC with that of private sector companies, which need to have a minimum of Rs 100 crore equity capital. LIC currently has a paid-up equity capital of just Rs 5 crore.

Section 25 of the General Insurance Business Nationalisation Act of 1972 says that no property located in India, vessel and aircraft registered in India can be insured without the permission of the government. "We want the right of granting permission to be given to Irda," he said.

"We are studying the suggestions made by the Law Commission, KPN Commission and suggestions made by life and general insurance councils for reforms in the insurance sector," he said.