Thursday, December 11, 2014
The Cabinet approved late on Wednesday the Insurance Amendment Bill with a composite foreign investment cap of 49 per cent for presenting it in Parliament, incorporating the changes suggested by a house panel.
The Cabinet, headed by Prime Minister Narendra Modi, approved incorporation of amendments suggested by a Parliamentary select panel in the Insurance Laws (Amendment) Bill, 2008, sources said.
The Rajya Sabha is likely to take up the Bill for consideration and passage next week.
Earlier, the Select Committee in its report to the Rajya Sabha had suggested hike in composite foreign investment limit in insurance sector to 49 per cent which would include foreign direct investment (FDI) as well as portfolio investment.
At present, only 26 per cent FDI is allowed in private sector insurance companies. The hike in foreign investment limit is estimated to attract about Rs 25,000 crore of overseas funds in the sector.
"The Committee recommends that the composite cap of 49 per cent should be inclusive of all forms of foreign direct investment and foreign portfolio investments," the report said.
Congress support for the Insurance Laws (Amendment) Bill, 2008, is crucial as the ruling NDA does not have majority in the upper house.
The Bill, which has been pending since 2008, may not have a smooth ride in the Rajya Sabha with certain political parties opposing further opening of the insurance sector to foreign investment.
New Delhi: Paving the way for the long pending Insurance Bill to be placed in the Rajya Sabha, the Parliamentary Select Committee has given its recommendations on amendments to the Insurance Act that seek to raise foreign direct investment or FDI cap to 49 per cent.
Finance Minister Arun Jaitley said that he was hopeful that the insurance market expansion would take place once the Insurance Amendment Bill is passed by Parliament.
He was speaking at a meeting with British insurer Standard Life's chairman, Gerry Grimstone, and Kotak Group's chief, Uday Kotak.
"The Finance Minister expressed his sense of satisfaction as the Parliamentary Select Committee has given its recommendations with regard to the Insurance Amendment Bill referred to it," an official statement said.
It, however, did not spell out recommendations by the committee headed by senior BJP leader Chandan Mitra.
There was speculation that the report may contain a few dissent notes by Opposition members in the committee.
The term of the committee, set up in August, was last month extended by two more weeks till December 12 to submit its report.
The Bill proposes to raise the composite foreign investment ceiling (including FDI, FII and NRI) from 26 per cent to 49 per cent.
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.
There are about two dozen private sector insurance firms both in life and non-life segment.
Once the Insurance Bill is passed, the foreign investment ceiling in pension sector too would increase to 49 per cent.
In the Rajya Sabha, the ruling NDA does not have a majority and would require support from other parties for the passage of the legislation.
Mr Grimstone and Mr Kotak are co-chairs of the India UK Financial Partnership.
Mr Jaitely further said that insurance, banks, mutual funds and securities are among the areas of cooperation between India and the UK.
Mr Grimstone said there is great potential for foreign investment in India in various sectors including insurance, infrastructure and pension.
He further said that the UK corporate sector will play an important role in making the 'Make in India' programme a reality and success.
Earlier, the India-UK Financial Partnership was launched by the UK's Chancellor of the Exchequer and the Finance Minister of India to deepen financial services links between the two countries and to strengthen co-operation between London and Mumbai, among the world's leading financial centres.
The Partnership will focus on development of corporate bond market, mutual sharing of expertise on financial sector and market regulation, enhancing financial training and qualification and financial inclusion.
The focus will also be on cross-border provision of financial and insurance services, pensions, internationalisation of the Rupee and infrastructure funding.
The statement said, "The partnership is about deepening the links between the two countries' financial services industries."
The Cabinet on Wednesday (10.12.2014) cleared a parliamentary committee's recommendations for a composite cap of 49 per cent on foreign investment in insurance in a report tabled in the Rajya Sabha.
The select committee report said that the cap on foreign investment in insurance includes foreign direct investment and foreign portfolio investments.
The select committee had in its report recommended 110 amendments to the Bill. In order to win Congress support, it had adopted 88 amendments by the Congress earlier. Support of the Congress will be critical in the Rajya Sabha where the NDA is in minority.
The Congress, however, did not dissent against the report adopted by the select committee, unlike the TMC, JDU, CPM and the Samajwadi Party, who are against increasing the FDI cap.
The government is in a rush to introduce the Bill for passing on Monday, Congress sources say the party will clarify its stance once the Bill is moved in the upper house.
Finance Minister Arun Jaitley said in his maiden Budget speech in July that the "composite cap" in the insurance sector should be increased to 49 per cent from the current level of 26 per cent, with full Indian management and control.
Here are the top 10 takeaways:
1) The Insurance Laws (Amendment) Bill aims to raise the ceiling on foreign direct investment (FDI) in insurance to 49 per cent from the current 26 per cent limit.
2) This marks a reversal from the BJP's earlier stance when it was in Opposition. It had then opposed raising the cap on FDI in insurance from 26 per cent. But last year it said it was not against raising the limit on FDI in insurance, but wanted certain caveats and conditions to "safeguard the interest of the people".
3) The 49 per cent FDI that the BJP-led NDA government proposes will be a composite cap - which means that foreign capital can flow in either as direct investment or via the portfolio route, or as a combination of both. So foreign investors can either directly buy equity from the company or can buy shares on the stock market. (How higher insurance FDI limit could benefit you)
4) The new measures will allow insurance companies to list on stock exchanges.
5) Barring public sector insurance companies, all other insurance companies will potentially benefit from a higher FDI cap.
6) To allay fears that Indian entities may lose control, the Bill provides that management must remain with Indian companies. And the approval of the Foreign Investment Promotion Board (FIPB) will be needed on any investment over 26 per cent.
7) Experts have said that a higher foreign direct investment limit in insurance could result in inflows of Rs. 40,000 crore to Rs. 60,000 crore over time, and immediate inflows of around Rs. 20,000 crore.
8) The Insurance Bill and the Sebi Bill, which aims at giving more teeth to the market regulator, were cleared by the Union Cabinet in July, days after Finance Minister Arun Jaitley made a promise to do so in his Budget speech, noting that "the insurance sector is investment starved. Several segments of insurance sector need expansion". (Cabinet approves 49% FDI in insurance)
9) The BJP had suggested 11 amendments in the Bill and had listed it in the Rajya Sabha. But the Congress had wanted these referred to a select committee.
10) Insurance was opened up to the private sector in 2000 with the Insurance Regulatory and Development Authority (IRDA) Act, 1999. From seven then, the number of companies operating in the life, non-life, and re-insurance segments has gone up to 53.
(With inputs from Reuters)
Monday, December 8, 2014
December 08, 2014
GENERAL MANAGER (HRM)
THE NEW INDIA ASSURANCE CO.LTD
MUMBAI – 400001
This has reference to the domiciliary lump sum medical payment to officers and employees in New India Assurance Co. Ltd. We draw your kind attention to the point No. 8 of Email dt. 1st. July 2014 sent by Mr. Madhu Elayath to all RO/ LCBO Incharges which reads as under – “If the spouse of an Officer is working in the industry in Class III/IV cadre, and if Officer or Development Officer is covered under Medical Benefit Schemed applicable to Officers/Development Staff, such spouse is not eligible to receive lumpsum payment towards domiciliary benefit”.
I request you to kindly recollect that we are regularly drawing your attention to this anomaly on various meeting with you in the past, urging your action to remove this discrepancy. We had also cited manual of United India which allows such payment. We have also stated you that such payment is also being released by other PSGI companies. When both husband and wife engaged in the same cadre are being eligible to receive such payment what wrong the poor class III Spouse of an Class I cadre has done by not receiving the same is hard to comprehend. It is very hard to find any logic or rationale behind such decision. Only your initiative is essential to remove such anomaly.
Your intervention in this matter is very much solicited and request your good self to instruct the concern department to settle the issue immediately.