Seeking views from the private sector on the contentious issue of foreign direct investment in the insurance sector, the government is understood to have indicated it may support the move but only after assessing the political environment.
The issue was discussed at a suddenly called meeting of finance minister Arun Jaitley with heads of private sector insurers on Thursday.
“We called for raising the cap on foreign direct investment in insurance to 49 per cent. The finance minister heard all suggestions but indicated that the government could move ahead on the issue but only after gauging the mood of the House,” said a source after the meeting.
“We are talking … it was a pre-Budget discussion,” said Nirmala Sitharaman, minister of state for finance, after the hour-long meeting that was also attended by officials from the department of financial services.
ICICI Lombard General Insurance MD and CEO Bhargav Dasgupta said, “We discussed various aspects, including increasing penetration. Again there was lot of discussion on FDI in insurance but nothing concrete … but discussion was how to attract more capital in industry and promote growth.”
Irda chairman TS Vijayan said there were deliberations on the various issues of insurance industry.
Liberalising FDI in insurance is seen one of the long pending financial sector reforms that has been pending since the term of UPA-I. Under current laws, FDI in insurance is capped at 26 per cent although the Insurance Laws (Amendment) Bill to hike the limit to 49 per cent has been pending.
Soon after taking charge at North Block late last month, Jaitley had asked the department of financial services to examine ways other than hiking the FDI cap for insurers to increase their capital.
In its suggestion, the department of financial services is understood to have said supported an increase in the FDI cap, across segments of life, health and non-life insurance, without any riders.
Earlier, the Standing Committee on Finance had earlier rejected any hike in FDI in the sector, saying
it may not have the desired effect and could expose the economy to global vulnerability.
The insurance sector was opened up to the private sector in 2000 after the enactment of the Insurance Regulatory and Development Authority Act, 1999.
Ways to increase capital
Finance minister Arun Jaitley seeks views from the private sector on the contentious issue of foreign direct investment in the insurance sector.
The issue was discussed at a suddenly called meeting with heads of private sector insurers on