Cabinet clears way for 49 FDI in insurance

After many years of debate, the government has decided to increase the foreign direct investment (FDI) limit in insurance firms from 26% to 49%. The government will now introduce a bill in Parliament to effect this change. The government, however, conceded that the bill may not be passed by the current Parliament for want of time.

Finance minister P Chidambaram on Friday announced that the Union Cabinet, which met last night, had decided that the government would introduce a comprehensive amendment bill. “The Union Cabinet gave its approval for introduction of the Insurance (Amendment) Bill, 2008, for amendment to Insurance Act 1938, General Insurance Business (Nationalisation) Act, 1972, and Insurance Regulatory and Development Act, 1999, in the Rajya Sabha on the basis of recommendations made by Group of Ministers,” Mr Chidambaram said. The bill is being introduced in the Rajya Sabha as it is not a money bill.

The Cabinet also approved introduction of Life Insurance Corporation (Amendment) Bill in the Lok Sabha. The bill, after its passage, will allow an increase in equity base of the insurance major from current Rs 5 crore to Rs 100 crore. Currently, insurers have to maintain minimum paid-up capital of Rs 100 crore as per the IRDA Act, but LIC was an exception since it is covered by a separate Act.

http://economictimes.indiatimes.com/Personal_Finance/Govt

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Cabinet clears way for 49 FDI in insurance