Cabinet set to approve pension, insurance bills

The cabinet is all set to approve bills to raise the cap on foreign direct investment in insurance sector and open the pension sector to foreign investors, which would roll out the next round of big-ticket reforms.

The proposals set for cabinet approval tomorrow include hike in the cap on foreign direct investment in the insurance sector from 26 per cent to 49 per cent and opening up of the pension sector (possibly allowing 26 per cent participation) to foreign direct investment.

Once the bills get cabinet nod, these will be brought in Parliament during the winter session in December this year.

The bills, which require parliamentary approval before becoming law, are part of the UPA government's financial sector reforms aimed at shoring up government finances and attracting foreign investment to revive economic growth.

Foreign groups are currently not allowed to invest in the lucrative pension sector, while investment in insurance sector is capped at 26 per cent.

The policy changes in insurance and pension sectors have been lagging because of opposition to allowing foreign participation in strategic financial sectors.

The government had to hold back similar reforms, earlier this year, as it failed to win over allies and opposition parties.

Both domestic and foreign insurers have been lobbying for years to raise the foreign direct investment limit in the financial sector.