Asian News - India: Finance Minister proposes IPOs of general insurance companies
Source: Asia Insurance Review | Apr 2016
Finance Minister Arun Jaitley has announced several measures in his 2016-17 Budget Speech concerning insurance and pensions, including a proposal for a public listing of the country’s government-owned general insurance companies.
He said that the general insurance companies owned by the government will be listed on the stock exchange. However, he did not stipulate a timeline for the initial public offers.
He proposed in the speech delivered on 29 February that foreign direct investments of up to 49% in insurance and pension companies will be allowed under the automatic approval route. This means that the overseas investors will not have to approach the Foreign Investment Promotion Board (FIPB) for approval for their stakes.
However, the existing requirements for local insurance companies to be under Indian management and control will have to be verified by the respective regulators, IRDAI and the Pension Fund Regulatory and Development Authority.
Last year, the government increased the foreign investment cap in the insurance and pension sectors to 49% from 26%. Currently, foreign direct investments up to 26% are permitted through the automatic approval route. For investments of more than 26% to 49%, the approval of FIPB is required at present.
New health insurance scheme for the poor
He announced too a new health insurance scheme aimed at families below the poverty line. The scheme will offer a cover of up to INR100,000 (US$1,466) per family, and for senior citizens aged at least 60, a top-up of INR30,000 will be available additionally. This is expected to cover one-third of India’s population against hospitalisation expenditure.
Mr Jaitley proposed as well uniform tax treatment for recognised provident funds, the national pension system and superannuation funds.