The process of listing of four public sector general insurance companies will begin one by one and “lot of action” is expected on the front in next few months, reported PTI.
“In the last Budget, government has announced listing of various public sector insurance companies and that is work in progress.
“We expect that the process of listing of the insurance companies will begin one-by-one. Modalities are being worked out and I think we should see lot of action on that front in the next few months,” Economic Affairs Secretary Shaktikanta Das said at the Economic Times ‘BFSI Best Brands’ Summit.
In his Budget speech, Finance Minister Arun Jaitley had proposed listing of four wholly-owned PSU general insurance companies. The four companies are New India Assurance Company, National Insurance Company, Oriental Insurance Company, United India Insurance Company.
Insurance sector regulator IRDAI released draft guidelines for Indian listed insurance companies. As of now, no insurer, either private or state-owned are listed. However, several of them shown intent to tap the IPO route and get listed.
Commenting on the narrowing down Current Account Deficit (CAD) numbers, released by RBI this evening, Das said it is a “significant” achievement over the previous year.
“If you see this figure (of CAD) along with fiscal deficit, revenue deficit figures and all the other macro-economic parameters that we have, contextually we can say that Indian economy is doing well. The fundamentals are robust, especially when we have strong global headwinds,” he said.
He said India should consolidate on its fundamentals to achieve much higher growth.
“7.6 per cent growth in the last year is not enough…I am sure we can do better,” Das said.
Das said with good monsoon rains, passage of GST constitution amendment bill and cumulative impact of recent economic reforms, “this year we can look at 8 per cent growth”.
Talking about the various steps taken by the government, Das said the new law on bankruptcy is a “game changing legislation” and the true impact of the law will be seen when it is implemented.
The Secretary said that government is also working on a comprehensive code for resolution of stressed situation in financial sectors.
“The law is in drafting stage and we are trying our best and we hope to introduce this law in the forthcoming Monsoon session of Parliament,” he said.
The bankruptcy law deals with corporates, LLPs and partnership firms. It does not deal with distress situation in financial firms.
Speaking at the occasion, Delhi Deputy Chief Minister Manish Sisodia said the “basic principle” of the state government is intent should be clear behind all policies and decisions.
Quoting Chief Minister Arvind Kejriwal, he said the government’s job is not do business, but to make doing business easy and “we are working on this principle”. He also said effort is also on to check leakages in taxes by using technology and public participation. He said several innovative steps have been taken in that direction.
Referring to programmes like Skill India and Digital India, Sisodia called upon the banks to support innovative ideas of youngsters and hand-hold them to become entrepreneurs.
Niti Aayog CEO Amitabh Kant said the key challenge before India is to rapidly expand its infrastructure.
State-run Life Insurance Corporation (LIC) currently has an agency force of over 10 lakh.
These targets were set out for LIC by Chairman S K Roy during his address to the senior divisional managers on a three-day conference here.
“During Fiscal year 2016-17, let us commit ourselves to set new records in sales and exponentially expand on individual non-single premium segments. We should target a minimum 4 crore lives to be covered and minimum two lakh agents to be added in 2016-17,” Roy told the 56th All-India Senior Divisional Managers’ Conference last week.
His optimism comes from the robust growth the Corporation could record in financial year 2015-16, wherein it grew by close to 25 per cent in terms of new policy issuances.
“Financial Year 2015-16 was a year of recovery for us. We recovered from below-par performance in fiscal 2014-15 to show positive results. On the basis of reporting of figures to the (regulator) Irdai, we have grown by 24.74 per cent growth in first year premium and 1.86 per cent growth in policies/ schemes,” Roy said.
During fiscal 2015-16, LIC had a market share of 70.44 per cent in number of policies and 76.84 per cent in the first year premium income, Roy added.
In individual single premium business, LIC’s market share stood at over 80 per cent in fiscal 2015-16, whereas in group single premium, the market share was more than 85 per cent.
Roy said LIC’s aim should be to outgrow the Indian economy, growing at a fast pace of 7.6 per cent now, at a multiple of at least three-times.
He said the potential for selling life insurance has not been tapped in any significant manner so far as the life insurance penetration is only a little above 3 per cent, leaving the insurance density in the country at much below the international averages.
Expecting competition to increase manifold in times to come, Roy said at least nine of the 23 private sector life insurers are likely to see an increase in the stake by their foreign partners.
“What is significant in this is that we should assess the impact of this on the performance of respective companies and what that means to us,” Roy said.
“The extant FDI policy for insurance sector has since been reviewed by the Government of India and accordingly it has been decided to enhance the limit of foreign investment in insurance sector from 26 to 49 percent under the automatic route subject to certain terms and conditions which have been notified on March 30,” RBI said in a notification.
“No Indian Insurance company shall allow the aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, to exceed forty-nine percent of the paid up equity capital of such Indian Insurance company,” it said.
“The foreign investment up to 49 percent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route subject to approval or verification by the Insurance Regulatory and Development Authority of India,” it said.
The foreign equity investment cap of 49 per cent will apply on the same terms as above to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and Other Insurance Intermediaries appointed under the provisions of the Insurance Regulatory and Development Authority Act,1999.
Earlier, only up to 26 per cent FDI was permitted through the automatic approval route. For FDI up to 49 per cent, the approval of the Foreign Investment Promotion Board was required.
There are 52 insurance companies operating in India, of which 24 are life insurance business and 28 in general insurance.
Private equity investments during the October-December period totalled USD 3.9 billion, taking the deal value for the year 2015 to USD 19.5 billion – the “best ever” for India, said a PwC report.
According to the PwC MoneyTree India report, a quarterly study of PE investment activity based on data provided by Venture Intelligence, the fourth quarter of 2015 saw investments worth USD 3.9 billion, a 12 per cent drop as compared to the same period of 2014.
However, despite the drop, the stellar performance throughout the year helped 2015 become the best year ever, with a total of USD 19.5 billion worth of PE inflows across 159 deals, reported PTI.
“India’s macros are looking good, with the current account and fiscal deficit at acceptable levels, a relatively stable rupee, inflation at below 5 per cent and, most importantly, a declining interest rate regime. This should encourage private investment as demand picks up,” PwC India leader, Private Equity Sanjeev Krishan said.
Sectorwise, the information technology and IT-enabled services (IT & ITeS) continued to be the biggest sector, as this space attracted USD 1.3 billion in 93 deals, followed by the banking, financial services and insurance (BFSI) sector that attracted USD 910 million in 10 deals.
“In 2015, sectors such as banking, insurance and telecom saw the stabilisation of their business and opened up their technology spend over the year, thereby driving the growth of the Indian IT & ITeS industry,” PwC India leader – Technology, Sandeep Ladda said.
“Media & entertainment sector was a surprise, attracting investments worth USD 414 million,” the report said.
Regionally, Mumbai attracted USD 1.9 billion, while Bengaluru was a distant second with investments worth USD 733 million.
Going forward, Krishan said, “financial services, technology and healthcare continue to see sustained activity in 2016, while e-commerce fundraising may get challenging this year at least in the near term”.
He added that the Indian Government’s focus on making it easier for foreign investors to do business in India will help from a perception standpoint and needs to be backed by real reform.