Mumbai, March 11, 2017
"People are not happy with mandatory listing. So, for time being, it will not be compulsory for insurers to list,” IRDAI Chairman T S Vijayan said.
Unlike the banking sector, the Insurance Regulatory and Development Authority of India (IRDAI) is not planning to make compulsory listing of insurance companies on the stock exchanges for the time being. “We had come out with the exposure draft on listing of insurance companies, but it’s still a draft. People are not happy with mandatory listing. So, for time being, it will not be compulsory for insurers to list,” IRDAI Chairman T S Vijayan said.
In August last year, IRDAI had come out with a discussion paper on listing of all life as well as non-life insurers. However, some of the insurance companies lobbied hard against the proposal for mandatory listing, stating that this condition was not stipulated while the regulator awarded the licence. The government also relented and supported the case of insurance companies.
However, in the case of the banking industry, the Reserve Bank has stipulated that a new bank should get its shares listed on the stock exchanges within six years of the commencement of business by the bank. The promoter of the bank should hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which will be locked-in for a period of five years from the date of commencement of business of the bank. The promoter group shareholding should be brought down to 15 per cent within a period of 15 years from the date of commencement of business of the bank. In the insurance sector, there’s no requirement for bringing down promoter stake. If the insurer is a joint venture, the foreign partner can hold up to 49 per cent.
According to Vijayan, the insurance regulator is also in process of coming out with outsourcing and process regulations very soon. Speaking on the sidelines of the Insurance Brokers Association of India’s (IBAI) annual summit, Vijayan said, while the gross domestic product (GDP) growth is 7 per cent in India, the growth of the insurance industry is at 17 per cent. GDP growth, demographic environment and insurance products developments are main factors for the growth of the insurance industry. Foreign insurance companies are opening their branches in India as they see more potential in India.
[The Indian Express]