Finance Minister Pranab Mukherjee on Monday said a slew of financial sector legislation to be introduced in financial year 2011-12 will pave the way for growth in foreign direct investments (FDI) in insurance, pension and banking sectors.
Mukherjee, while presenting his sixth annual budget, said the long-pending financial sector legislation like the Insurance Laws (Amendment) Bill, Pension Fund Regulatory and Development Authority (PFRDA) Bill, Life Insurance Corporation (LIC) Amendment Bill, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act and the State Bank of India (Subsidiary Banks) Bill, will be fast tracked.
The most significant are the Insurance Legislation Bill, which proposes an increase in the FDI limit to 49 per cent from 26 per cent and the PFRDA Bill.
The insurance legislation is important as the capital-intensive insurance industry is eagerly waiting the Initial Public Offer (IPO) guidelines from Insurance Regulatory & Development Authority (Irda). Most insurance firms operating in India have foreign partners.
Since a number of these firms will be completing 10 years of operations and will be eligible for tapping the capital market, their foreign partners have shown interest in increasing their stake to 49 per cent (as proposed in the Bill).
"We are pleased to note that the Government is re-iterating the intent to table the various financial sector bills in Parliament. We will await some progress on this," said TR Ramachandran, CEO & managing director, Aviva India.
"The FM clearly stated that the new legislations regarding Insurance, Pensions and Banking would be tabled in this session of Parliament. This is a welcome move," said P Nandagopal, managing director and CEO, IndiaFirst Life Insurance Company Ltd.