FDI is inevitable if insurance industry has to grow: Ex-IRDA chief

FDI in insurance can straightaway expect an inflow of $1-$1.5 billion, that will help boost the foreign exchange reserves, J Hari Narayan says

June 05, 2014 10:12 IST | India Infoline News Service
Former IRDA chief J Hari Narayan said that the industry over the last 12 years has attracted over Rs. 33,000 crore of capital across all the private life insurance companies, according to TV news channel report.
It is a positive move to get that FDI (foreign direct investment) level to 49%. We can straightaway expect an inflow of $1-$1.5 billion, that will help boost our foreign exchange reserves, the report added.
Narayan said that FDI is inevitable if the insurance industry has to grow. There is no question about it, we will not have the capital required to fund that kind of growth of the insurance industry.
The Ministry of Finance is considering to raise FDI cap in insurance sector from 26% to 49%. However, the hike in the sector is expected to be introduced with some riders like restriction on voting right, the report added.
The industry players have sought an increase in the FDI limit to raise funds for expansion.
The finance ministry is expected to raise the FDI cap in the sector by starting first with the non-life segment and then moving on to other segments.
Last week Financial Services Secretary GS Sandhu gave a presentation to Finance Minister Arun Jaitley on the issues concerning the insurance sector.
The insurance sector was opened up to the private sector in 2000 after the enactment of the Insurance Regulatory and Development Authority Act, 1999.
The Insurance (Amendment) Bill that had proposed raising FDI limit to 49% has been pending in Parliament since 2008.

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