Arun Jaitley seeks insurers’ views on FDI cap

Finance minister Arun Jaitley today met CEOs of private sector insurance companies to discuss issues related to capital requirements, in the light of industry demands for new initiatives like raising FDI limit to 49 per cent from 26 per cent so that they get the much needed capital to enhance operations.

While the government is understood to have expressed willingness to support the demand, it is unlikely to move further without assessing the views of all stakeholders, including state-run insurers and reviewing the current political climate.

Jaitley is also reported to have earlier asked the department of financial services to look for ways other than hiking foreign direct investment for insurers to increase capital.

The meeting with heads of private sector insurers was called at short notice by the finance minister.

Minister of state for finance Nirmala Sitharaman who was also present at the meeting attended by officials from the department of financial services, said after the hour-long meeting, ''It was a pre-budget meeting.''

''We called for raising the cap on foreign direct investment in insurance to 49 per cent. The finance minister heard all suggestions but indicated that the government could move ahead on the issue but only after gauging the mood of the House,'' reports quoted an industry representative as saying.

ICICI Lombard General Insurance MD and CEO Bhargav Dasgupta said, ''We discussed various aspects, including increasing penetration. Again there was lot of discussion on FDI in insurance but nothing concrete … but discussion was how to attract more capital in industry and promote growth.''

IRDA chairman T S Vijayan said there were deliberations on the various issues of insurance industry.

Besides the issue of capital, the meeting discussed issues like board representation, differential voting rights, raising tax break limit for the sector for encouraging investment, as also raising tax exemption limit from the existing Rs15,000 per year for policy holders.