Insurance Bill: Panel for hiking FDI cap to 49%

The much-awaited report of the Parliamentary Select Committee is believed to have endorsed most provisions of the Insurance Amendment Bill, including a composite cap of 49 percent for FDI and other foreign investments.The report of the 15-member Parliamentary committee on this Bill, held up for nearly six years, is likely to be placed before the Rajya Sabha tomorrow. After getting a favourable recommendation from the panel that includes members from all major political parties, the government is likely to bring the Bill for consideration of the Upper House as early as next week.The House panel is believed to have adopted the report, which may contain dissenting notes from parties like TMC, with a majority vote. The panel, headed by Rajya Sabha MP Chandan Mitra, has suggested inclusion of a person from the insurance industry in the Securities Appellate Tribunal as an expert. It has recommended suitable amendment to the Securities and Exchange Board of India Act for the inclusion. The panel is believed to have recommended that penalties on insurance companies be linked to seriousness of offences committed by them. It has suggested mechanism to ensure that there is minimum scope for subjective interpretation. The Standing Committee on Finance headed by senior BJP leader Yashwant Sinha in 2011 had rejected the proposal to hike FDI to 49 percent in the insurance sector, saying it may not have the desired effect and could expose the economy to global vulnerability. The Select Committee, however, has unanimously agreed not to bring down the paid-up equity capital in health insurance sector as compared to the life and general insurance. The paid-up capital requirement for the health insurance has been retained at Rs 100 crore. The panel believed to have strongly suggested that the capital requirements to ensure health insurers of adequatecapacity and to provide these critical services to all the citizens may be retained at the level of Rs 100 crore and health insurance be given the top priority.