Wednesday, July 23, 2014

Govt To Put Insurance Laws (Amendment) Bill In Parliament Soon

The Union Finance Minister Mr. Arun Jaitley in his maiden budget speech on Thursday announced that the pending Insurance Laws (Amendment) Bill, which proposes to raise the FDI (Foreign Direct Investment) ceiling to 49 per cent from current 26 per cent, will immediately be brought for consideration before Parliament.

This move will help the sector in two ways - First, this help companies access capital more easily, which is huge positive, given that the insurance sector is capital intensive. And second, this could act as a trigger for listing of insurance players, which will provide a better yardstick to value these companies.

In his speech, Mr. Jaitly said benefits of insurance in India have not reached to a large section of the people as insurance penetration and density are very low. He assured that the government would work addressing this situation in multi-pronged manner with support of all stake holders concerned.

The voting rights of foreign stakeholders shall not exceed 26 per cent in the aggregate and the CEO of the said Indian insurance company, to be appointed by its Indian stakeholders, and the majority of the company's directors shall be Indian nationals.

The Insurance Laws (Amendment) Bill was first mooted by the previous Congress-led UPA government, and has been pending in the Rajya Sabha since December 2008, as the BJP didn't support it arguing that raising the FDI ceiling to 49% would expose the sector to global vulnerability.


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