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Sunday, Oct 24, 2021
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Levelling The Playing Field

A watered-down IRA Bill could end up easing pressure on LIC and GIC

Levelling The Playing Field
Levelling The Playing Field
outlookindia.com
-0001-11-30T00:00:00+05:53

AFTER several hiccups, the Insurance Regulatory Authority (IRA) Bill was finally cleared by the Parliamentary Standing Committee on Finance last week, ending years of speculation over the future of private insurance in the country. In clearing the final hurdle, however, the bill has had to lose a lot of its steam.

The committee led by Murli Deora put several key limitations to the bill which may lead to a change in the entire approach that private and foreign insurance companies have had in India. Primarily, it recommended that foreign equity in the new ventures be pruned from 40 per cent to 26 per cent. This would be done by removing the 14 per cent holding proposed in the bill for NRIs, FIIs and overseas corporate bodies. Most importantly, it limits the entry of private insurance to only one line of business—life, general or reinsurance. The committee has also doubled the minimum share capital of the new companies to Rs 200 crore. The time given to Indian companies to equalise their stake with the foreign partners (by diluting their 74 per cent...

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