Reliance Life Insurance may not be able to come out with an initial public offer now, with the regulator IRDA saying that any Indian promoter having more than 26 per cent equity in an insurance venture can reduce its stake only after ten years.
"The IRDA has pointed out that the 6AA provision of the Insurance Act specifies that Indian promoters having more than 26 per cent shareholding shall after 10 years reduce it in some appropriate manner or within such period the central government may decide," IRDA chief J Hari Narayan said when asked what is the regulator's view on the company's IPO plan.
"At the moment they have not finished 10 years but if the central government wishes to reduce the period it is a matter to be decided by the government," he said.
When asked whether Reliance Life has sought reduction in the waiting period (currently 10 years) from the government, Reliance Capital Chief Executive Officer Sam Ghosh said, "I don't want to comment on that."
Reliance Capital is the holding company of Reliance Life Insurance.
Ghosh had said "the funds raised through this divestment would be partly infused into the insurance arm and partly into Reliance Capital."
