The Centre, in consultation with the insurance regulator, is likely to come out with rules shortly on the ways in which foreign promoters can raise stakes in domestic insurance companies.
Despite the promulgation of the insurance ordinance in December, which raised the foreign investment limit in the insurance sector to 49 per cent from 26 per cent, it remains silent on the avenues through which foreign promoters can hike stakes.
The rules are likely to determine the manner in which foreign promoters can raise stakes – by diluting equity capital or through raising fresh equity. According to industry officials, the rules are also likely to allow foreign companies to raise the FDI through the FIPB (Foreign Investment Promotion Board) route rather than the automatic route and define the clause on Indian management control.
TS Vijayan, Chairman of the Insurance Regulatory and Development Authority of India, said that many insurers have started preliminary discussions to raise FDI and are awaiting rules from the government for foreign insurers to raise stakes in the companies.
Andreas Kleiner, Member of the Board of Management, ERGO International AG, said in a recent interview that the company has respective clauses in its joint venture agreements and is keen to raise stakes in the joint ventures.
UK-based Bupa also recently announced that it will raise stake in its Indian health insurance venture, Max Bupa, to 49 per cent from the current 26 per cent, becoming the first foreign company to announce a hike in shareholding following amendments to the insurance laws.
The Insurance Laws (Amendment) Ordinance, 2014, will be taken up for consideration and passage in the current session of Parliament.