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IRA chief rules out 100 pc arms of global insurance companies in India

Insurance Regulatory Authority chairman N Rangachary today ruled out the possibility of allowing fully owned subsidiaries or opening up of branches by international insurance companies in India.

Addressing newsmen after signing a memorandum of understanding with the Indian Institute of Management, Bangalore, he said joint ventures and equity participation with Indian companies by foreign insurance companies, however, would be permitted.

He said the Insurance Regulatory Bill permitting only 26 per cent equity holding by foreign firms, which is yet to be passed by Parliament, would be taken up by the new government after the elections.

The opening up of the insurance sector would boost healthy competition, especially in the life insurance sector having exorbitant potential in India.

Discounting the possibility of domestic insurance companies buckling under pressure from international insurance lobby, he said the sector in India was well estabilished. The new entrants would be able to garner only ten per cent of the market, he added.

To a question about the level playing field for the new companies, he said the income tax exemption being extended to LIC would be extended to all life insurance operators.

With regard to the regulatory framework to cope with the opening up of the market, he said the new regulatory law would have all the teeth to meet the requirement.

UNI

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