Rajya Sabha to discuss Insurance Bill on Monday

NEW DELHI: The Rajya Sabha is likely to take up for discussion on Monday the Insurance Bill which seeks to hike foreign investment cap in the sector to 49 per cent with a rider that management control remains with Indian promoters.

"Insurance bill is likely to be taken up for discussion in the Rajya Sabha on Monday," said top sources in the Finance Ministry.

The Bill, which was listed in the Rajya Sabha agenda today, could not be taken up for discussion as the opposition wanted more time to go through the amendments, the sources said, adding that the government has proposed as many as 97 amendments to the original bill.

Finance Minister Arun Jaitley in the Budget 2014-15 speech had said that the insurance sector was investment starved and there was a need to increase the composite cap in the sector to 49 per cent, with full Indian management and control, through the FIPB route.

Once approved by Parliament, it would help insurance firms to get much needed capital from overseas partners.

Last week the Cabinet gave a go-ahead to FDI cap hike in insurance to 49 per cent with a rider that management control will remain in the hands of Indian promoters.

The approval to hike the FDI limit from the current 26 per cent, a proposal which has been pending since 2008, is expected to attract long term capital, besides improving the overall investment climate.

According to some estimates, the FDI cap hike in insurance would fetch Rs 25,000 crore foreign funds into the sector.

This is the first major reform initiative by the Narendra Modi-led NDA government, and has raised expectations of further relaxation of FDI norms in sectors like defence and railways.

After the Parliament nod, all investment proposals beyond 26 per cent will have to be approved by the FIPB and Indian promoters will continue to have the control of the management.

With the Cabinet approving the amendments to the long pending Insurance Laws (Amendment) Bill, it will now be taken up by Parliament.

After the Bill is passed, the same norms for foreign investment will apply to the pension sector as well.

There are about two dozen private sector insurance firms both in life and non-life segment.