Monday, June 23, 2014

Ex-IRDA Chairman Bats For FDI In Insurance Sector

An increase in the Foreign Direct Investment (FDI) capping in insurance sector is inevitable if it has to grow, and this move will attract foreign investments about USD 1-1.5 billion (Rs. 6,000-9,000 crore) immediately, according to Former IRDA Chairman Mr. J Hari Narayan.

The Finance Ministry is considering raising FDI capping in insurance sector to 49 % from existing 26 % with some riders, such as restriction on voting rights.The reason behind a probable restriction of voting rights for foreign investors is to ensure that the control of the critical sector involving lifetime's savings of a large number of people does not pass into foreign hands.

In an interview with CNBC-TV18, Mr. Narayan dismissed the concern that a foreign partner will get a gigantic controlling stake even at 49%. Former IRDA boss believes that insurance regulations are very strong in India, and it is very unlikely for adverse investments in insurance sector.

According to Mr. Kshitij Jain, MD & CEO of Exide Life Insurance, many foreign investors are interested in Indian insurance industry which accredits strong fundamentals.

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