| C S Rao, chairman of Irda, told reporters today at the sideline of a national seminar on insurance organised by the Merchant Chamber of Commerce, that it might not possible for Indian partners to pump in 74 per cent of the incremental equity required to keep up with the solvency norms prescribed by the authority on a regular basis when the volume of the business increasing. |
| So it was necessary for the government to increase the cap on foreign holding from the present level of 26 per cent. |
| "The decision needs to be taken by the government, as it might not be possible for Indian companies to keep pumping in most of the equity when the volume of business reaches high levels," he explained. |
| Almost all large global insurance players have their presence in the country in the form of JV partners with Indian companies and all of them are fully operational. The volume of business was expected to keep growing. |
| The extent to which the India partners will be able to pump in funds to meet solvency norms will depend on the Indian group's financial capability as well as the profits earned by the company. Each company had its own road map and targets for breaking even. |
| "Hence the demand for raising the cap will be from the industry and we will take a look then," he explained. |
| Insurance industry sources said the foreign joint venture partners of life insurance companies were keen on increasing their stake in the JVs which will also allow them to pump in larger funds in the form of equity. |
| German insurance companies had in fact made a formal proposal to the government for allowing them to increase their stake. They had said that German insurance companies were keen on increasing the extent of activity in India but for the cap on holding. |
| Rao also said that there had to be some form of intermediation in the Third Party Administrators which has seen a mixture of success and failure. |
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