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Insurance sector wants FDI cap up to 49%
Our Banking Bureau
15 October 2001
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Mumbai: Most private insurance players are of the opinion that the FDI cap on private insurance companies should be increased to 49 per cent from the current 29 per cent. This raise is particularly necessary as new companies have to bring in funds infusion of about Rs 400 to Rs 500 crore in the initial years, and such large amounts can only be brought in with foreign partners’ active funding.

The above findings came up in a survey conducted by Ficci, which covered almost all the private players in both life and non-life sectors.

Given the nature of the business, new companies will be able to break even only after seven to 10 years. Only multinational companies have the financial ability and the technical skill to meet such contingencies.

In the survey, 90 per cent of the players were of the opinion that bank assurance will emerge as a vital component for distribution of insurance products, but there was a majority opinion that banks in India are not well equipped to distribute insurance products.

send this article to a friendThe survey also showed that most companies felt rural insurance is a viable business opportunity. However, the definition of the rural sector by the regulator was not in consensus with the census. Once this discrepancy is sorted out, rural insurance can take off in a big way.

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Insurance sector wants FDI cap up to 49%