New Delhi, August 7
The Insurance Amendment Bill that is facing a stalemate in Parliament has clearly spelled out the inclusion of portfolio investors in the FDI cap at 49%.

It clearly mentions portfolio investors being included in the foreign ownership cap which is being hiked from 26% to 49%.

Portfolio investors imply foreign institutional investors (FIIs) who invest in the stock markets and companies.

Among the key provisions of the Bill is that the Bill and a related official Amendment proposes that the foreign equity cap on the aggregate holdings of equity shares by foreign investors, including portfolio investors, in Indian insurance company will be kept at 49% of the paid-up equity capital of such Indian insurance company with safeguards such as Indian ownership and control, in such manner as may be prescribed. This has been done in order to meet the growing capital requirements of the insurance sector.

The portfolio investors’ clause was not there in the previous Bill moved by the UPA government. The Opposition parties are objecting to FIIs being included with the FDI definition in the overall cap.

In FDI cases, there is sometimes lack of clarity over the definition of foreign ownership, control and the distinction between FII and FDI which needs to be clarified for the participants in the sector.

Taking into account, and largely accepting the recommendations of the Standing Committee on Finance, the Government has finalised 97 official Amendments to the Bill, as approved by the Cabinet on July 24.

The insurance Bill has been hanging fire since its introduction in 2008 and even now a consensus is eluding it. The announcement of the FDI hike in the Budget had enthused the industry which is now hoping that Parliament passes the Bill.

Shashwat Sharma, partner, KPMG in India, said, “We hope to get clarity soon on contents on the Insurance Amendment Bill and its passage in Parliament as the FDI limit enhancement is expected to bring in additional foreign capital across life, health and general insurance companies to the tune of Rs 20,000 to 25,000 crore”.

Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Limited, said, “We welcome the proposal to increase the FDI limit in the insurance sector from 26% to 49%. We believe that once cleared by Parliament, the hike in FDI will enable us to capitalise on the immense under-penetration of the sector in the country.”

Apart from the FDI cap hike, the Bill contains provisions allowing the public sector general insurance companies and GIC will be permitted to raise capital from the market to meet future capital requirements, provided that the Government’s shareholding would not be allowed to come below 51% at any point of time.

Ashok Kumar Roy, chairman and managing director, General Insurance Corporation of India (GIC), said today that with FDI limit going up to 49%, the competition will intensify in the insurance sector to benefit insurers in terms of reduced premium for insurance policies including insurance premium for unforeseen circumstances.

Another provision in the Bill is to encourage health insurance in India. The capital requirement for a health insurance company is now proposed at Rs 50 crore (instead of Rs 100 crore for General Insurance companies) with a view to reduce entry barrier to a sector which is a priority sector in the insurance space.

New Delhi, August 7
The Government appears to be reconciled to the view that the Insurance Laws (Amendment) Bill may have to await its turn in another session amid stiff resistance from the Opposition that the proposed legislation be referred to a select panel.

According to sources in Parliament, the Rajya Sabha Business Advisory Committee (BAC) that met today to discuss the agenda before the House next week and there was no mention from the government of its intent to bring up the Bill.

The BAC meets every week to decide on the agenda including government business, debates and discussions that are to be scheduled and allocates time for it. The Congress-led Opposition that is majority in the Rajya Sabha has submitted a notice to move a motion that the Bill be sent to the panel for examination on the grounds that the amendments being moved alter the definition of FDI and permit institutional investors. Recently, the AIADMK too submitted a separate notice on similar lines thus make the opposition stiffer.

The Government, the sources said, is keen to push through other legislative agenda including three Bills relating to labour laws as also the amendment to Juvenile Justice Act before the current session of Parliament scheduled to conclude on August 14.

Since it is running out of time, the options before the Government are limited. It could either prefer not to move the Bill for consideration and passage in the current session and deny the Opposition to exercise the right to move the motion or prefer to bring move the motion itself allowing constitution of a select committee. By agreeing to refer to the select committee on its own, the government can enable the panel to examine it in the period before Parliament meets for the winter session. 

Chandigarh, August 7
Lt Gen KJ Singh, GOC-in-C, Western Command, while welcoming the government’s decision to hike the FDI limit in Defence from 26% to 49%, today exhorted the industry from North, especially Punjab and Chandigarh region, to aggressively take part in Defence production. He said this after inaugurating CII Secure North, a three-day conference on safety and security, organised by CII here.

General Singh said the government wanted to increase the FDI limit to 74%, however, it settled for 49% only. “I am sure the government will have to increase the FDI limit to 74%,” he said.

“We expect the small and medium enterprises (SMEs) who are struggling to sustain their businesses due to lack of capital would benefit with this decision,” he said.

General Singh said the Indian government is committed to involve the industry in Defence production and has recently eased regulations and licensing required for production of various items by removing them from the negative list for production by civilian industry.

“I invite the MSMEs and large-scale industry from this region to manufacture and supply top-quality products, components and parts to Defence, paramilitary and security forces. For the first time, we have also initiated a project for production of a transportation aircraft by the civilian industry,” he emphasised.

Seeking the industry’s support in employing ex-servicemen, he said, “Every year, over 60,000 disciplined and trained servicemen aged between 36 and 38 years retire from the armed forces. I am ready to train them with the skills and fields as required by the industry and I appeal to the industry to employ them under its Corporate Social Responsibility (CSR)”. 

Mumbai, August 7
For the convenience of people to pay school fees and municipal taxes and utility bills through an integrated platform, the Reserve Bank today proposed setting up an "anytime anywhere" bill payment system.

Bill payment is a major component of the retail payment transactions as over 3,080 crore bills amounting to more than Rs 6,00,000 crore are generated each year in the top 20 cities in the country.

Though various forms of payments are accepted, cash and cheque payments continue to be predominant, particularly at the Billers' Own Collection Point.

The existing systems do not fully address the needs of the customers to pay a variety of bills including utility bills, school/university fee, municipal taxes, due to lack of interoperability in the payment processes and lack of access to various modes of electronic payments by a vast majority of customers, the RBI said.

It has proposed Bharat Bill Payment System to offer bill payment system and "offer interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment. — PTI