IRDA chairman advocates raising FDI cap in insurance; says it will enhance growth

MUMBAI: Insurance Regulatory Development Authority ( IRDA) Chairman J. Hari Narayan today advocated the need to raise the FDI cap in the insurance sector. Addressing an Assocham conference on insurance on Monday, Narayan said: "Insurance, like many other sectors in India requires greater levels of investments and in that regard we would welcome steps to increase FDI in the insurance industry."

He said most insurance companies were facing a cash crunch and raising the FDI limit would enable them to grow and infuse more capital in the business. "The bill for enhancing FDI in insurance industry has been moved by the government in the parliament and we have provided all our inputs to the government in this behalf," he added.

Commenting on the reforms in the insurance sector, Narayan said "The good part of the reforms in the insurance sector is tied up with the insurance amendment bill. Unless that is done, the rest of it will only be in the window dressing stage and the fundamental structure won't be addressed."

IRDA has also given its views on tax and investment norms in insurance sector ahead of their meeting with the Finance Ministry on Wednesday. "Certain tax measures will be beneficial and will encourage the growth of the insurance industry," Narayan added.

Top insurance companies had met the finance minister last fortnight and suggested measures to grow the insurance sector. Irda will discuss these measures with the finance minister in the meeting on Wednesday.

Talking about the guidelines on life-insurance products, Narayan said the "draft guidelines on life-insurance products will be sent to the life council for discussion within two-three weeks time."

The Irda chairman was also unrelenting on the issue of pension plans and annuities. "Only proper pension products which end into an annuity will be cleared by Irda. But the products which are only called pensions without any pension element will not be approved."