Insurance FDI gets mixed reaction from industry players
Irda chairman J Hari Narayan welcomed the decision to allow up to 49 per cent FDI in insurance. “If the insurance sector has to double then it would require at least Rs 30, 000 crore in the next five years,” he said.
The Union Cabinet on Thursday approved the Insurance Laws (Amendment)Bill, 2008 that could possibly be the biggest churn in the industry since 2000 when the sector was opened to foreign investors. Since then, 22 of the 23 private life insurers have tied up with overseas partners, while most of the 24 private sector general insurers have foreign equity.
“It will definitely help bring in fresh FDI in these companies, many of which have been bleeding losses. More importantly, we can see the entry of fresh players as 49 per cent stake would given them stronger shareholding rights,” said Punit Shah, partner, KPMG.
However, private sector life insurers are not very upbeat about the decision, pointing that other avenues such as listing are available to raise capital.
“There is nothing new in the decision. It has been going on since 2008. Unless there is some definite legislative action, we will not firm up plans for further foreign equity injection,” said an official with a private life insurer.
Meanwhile, Sam Ghosh, CEO of Reliance Capital said, “The hike
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