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NBFCs can invest more than 50% in insurance JVs: RBI

At present, NBFCs are not allowed to invest more than 50% of their group equity in insurance joint venture with a bank.

November 29, 2013 9:56 IST | India Infoline News Service
The Reserve Bank of India on Thursday said that non-banking finance companies can invest more than 50% of their total equity in insurance joint ventures with banks.

At present, NBFCs are not allowed to invest more than 50% of their group equity in insurance joint venture with a bank.

“It has been decided that in cases where IRDA issues calls for capital infusion into the Insurance JV company, the Bank may, on a case to case basis, consider need based relaxation of the 50% group limit, the RBI said in a notification.

The relaxation is subject to compliance by the NBFC with all regulatory conditions, it said.

The IRDA often requires an insurance company to expand its capital, taking into account stipulations of the Insurance Act and its solvency requirements, the RBI said.

The limit on NBFC holdings may act as a constraint for the insurer in meeting the IRDA requirement, it added.

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