House panels views on Insurance Bill by next month

The Parliamentary standing committee on finance is finalising its report on the contentious Insurance Laws (Amendment) Bill,2008. It is likely to be submit the report before the start of the Budget session from February

21, said a source privy to the development.

The Parliamentary panel,headed by BJP leader Yashwant Sinha,however does not seem to be very enthusiastic about hiking the foreign direct investment limit in the insurance sector.

While a section of the committee including Left leaders has called for nixing the move,others believe there needs to be severe restrictions if the foreign direct investment limit has to be increased.

There is a view that the only reason why Indian insurance companies did not face trouble after the financial crisis of 2008

was because they were well protected and monitored. With greater foreign participation,this will certainly not be the case, the source said.

The committee is now finalising its views on the contentious Bill which the UPA government has been pushing for over five years now.

During its first stint,the UPA was unable to table the Bill because of stiff opposition from its Left allies. It managed to introduce the Bill only after the Left parties withdrew support from the government. However both the Congress and BJP parties support an increase in foreign direct investment in the insurance sector.

There will have to be some sort of compromise. It may not be possible or even wise to reject the Bill completely, the source said adding that the committee is looking at various options.

Apart from hiking the foreign direct investment limit in the sector,the Bill also seeks to allow state run general insurance companies to tap the capital markets and allow foreign re-insurers like Lloyds of London to set up re-insurance branches in the country.