LIC favours raising FDI cap in insurance sector to 49 pc
New Delhi: Public sector insurer LIC has lent its support to government’s proposal of raising the FDI limit in the sector to 49 per cent, a move criticised by a section of the select committee that is evaluating amendments to a Bill pending for four years in Rajya Sabha.
Sources said LIC Chairman S K Roy, while presenting the view of the country’s largest insurer at a recent meeting of the select committee, was in favour of raising the cap from 26 per cent now, which according to some members is “politically motivated.”
Agitated members asked Roy about his company’s stance earlier and what made it change its stance. Roy, the source said, “I don’t know what LIC’s stance was. I will check and let you know.”
This led to sharp exchanges between the Committee Chairman Chandan Mitra and Trinamool Congress member Derek O’Brien.
While Mitra tried to pacify members saying that the issue was not important, Derek said he was sensing something “politically fishy” with LIC supporting the proposal.
Roy is the only head among public sector insurers to make a presentation before the 15-member panel. He refused to comment on what transpired during the meeting.
LIC was the sole insurer in the country before the opening up of the sector for foreign investment and since then, it has lost its market share which now stands at 75 per cent.
Derek, however, also declined to comment when contacted, but said, “If this information is true, then LIC Chairman was trying to please his bosses in BJP and BJP is using him for political purpose.” He also said his party was not in favour of raising the FDI cap in insurance sector.
The Trinamool Congress leader also said he would write to the Chairman of the Committee asking him to incorporate views of different unions representing the public sector insurance companies before drafting the final report.
Derek said opening up of the sector has not yielded any “significant” result with just Rs 7,700 crore foreign funds coming into the sector in last 15 years and market penetration rising to 4.6 per cent from 1.2 per cent during the period.
Sources said three members from Congress, one each from TMC, CPIM and JD-U expressed their reservations on the passage of the Bill. Six members from BJP, SAD and BJD were in favour and two members from AIADMK and BSP were still undecided. The SP member was not present in any of the two meetings held so far. However, this information could not be individually verified.
After the first meeting of the panel earlier this month, committee chairman Chandan Mitra had said: “We will try to submit our report on the Insurance Bill by the third week of November”.
The panel headed by the senior BJP leader also recorded “oral evidence” of the representatives of General Insurance Council, a body set up by insurance regulator IRDA.
Besides, top officials of ministries of Corporate Affairs, Finance, Law and Justice Ministry and Commerce presented their views on the Bill.