"Though we are in talks with many companies, we are likely to tie-up with a maximum of three for life insurance and one or two companies for non-life business," Rashad Kaldany, director, South and Southeast Asia department, IFC, said.

However, plans of the private funding arm of the World Bank will hinge on the investment cap finally decided by the government for foreign financial institutions. "If the current proposed limit of 26 per cent for foreign investors is retained, it is difficult for IFC to pick up equity in insurance companies."

The multilateral agency which usually picks upto a maximum of 25 per cent in a private company would seek equity participation of between 10 per cent to 20 per cent in the Indian insurance companies. "We would invest to theextent that ifc has a nominee on the board to protect our interests in the company," Kaldany added.

He however did not clarify how much of the company's estimated 150 million dollar investments in 1999-2000 would be earmarked for the insurance sector. After a lull in 1998 in the company's investments which had stopped to $54 million on account of nukes-related sanctions, financing of private companies had surged to $72 million in 1999. The agency invested in three companies, sarshatali Coal Mine, Carraro India Ltd and Moser Baer India Ltd, in 1999.

The planned investments in insurance sector, Kaldany said, would form part of the IFC strategy in India to exploit synergies among private infrastructure development and financial markets. The multilateral agency would also focus on additional financial markets like contractual savings, housing finance and distressed asset resolution, mechanisms for sme finance and strengthening banks and non-banking financial institutions.

On the increased emphasis towardsthe life insurance business, the IFC sources said it would help development of infrastructure investment.

It is estimated that rapid growth in insurance and the liberalisation of investment norms for pension funds could generate $20 billion over the next ten years, supplying 40 per cent of the funds required to boost the nation's infrastructure.

IFC has been emphasising projects supporting private entry into such areas as infrastructure, banking, contractual savings and the mutual fund industry.