'No impact of FDI cap increase in insurance cos on management'
Press Trust of India / New Delhi Aug 03, 2009, 15:56 IST
The government today said raising foreign direct investment (FDI) cap in the insurance sector to 49 per cent will not result in automatic change of management in a company.
"Increase in foreign equity holding limit to 49 per cent in the insurance sector would not result in change in management control automatically", Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply in the Lok Sabha.
The government is proposing to raise the FDI cap in private sector insurance companies from 26 per cent to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.
The Insurance Laws (Amendment) Bill, 2008, which was introduced by the government in the Rajya Sabha in December 2008, provides for enhancement of share holdings by a foreign company, either by itself or through its subsidiary firms or its nominee in India insurance companies from 26 per cent to 49 per cent, except in case of insurance co-operative societies where the limit continues to be 26 per cent.
Scindia further said that there is no proposal to extend the limit of FDI in banking and media. At present, FDI up to 26 per cent in media sector and 74 per cent in banking is allowed. "...There is no proposal to extend the limit of FDI in banking and media," he said.
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