Pages

Insurers facing capital drought

NEW DELHI: India's fledgling life insurers, unable to go public and hamstrung by limits on stake sales, could be starved of capital unless rules are changed to make it easier for them to raise funding.

The number of life insurers has risen to 22 since the market was opened in 2000 to challenge state-owned Life Insurance Corporation's monopoly, but existing regulations prevent insurers from selling stakes of more than 26 per cent to foreign partners or from going public in their first 10 years.

Insurance firms are also not permitted to raise debt, which means controlling shareholders, must foot the bill in order to fund further growth, which requires building costly distribution networks.

Hopes that the limit on foreign stakes would be raised to 49pc were dashed last year when parliament failed to vote on a measure.

Regulators, meanwhile, are drafting guidelines for IPOs and are considering an application made last month by Reliance Capital's insurance unit to float an IPO before the normal 10-year period.

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...