The finance ministry has given its nod to Reliance Life Insurance’s proposal for an initial public offer (IPO) and also opened the door for other life insurance companies to follow suit in case they have completed five years or more in operation. The proposal is now awaiting the final seal of approval from the finance minister, officials in the government told The Indian Express.

“On the policy front, we have given our in-principle approval to Reliance Life and other companies — that have spent five years or more in operation — to go public. Now, it is for the insurance regulator to make sure that the companies meet regulatory approvals before they are allowed to do so,” said an official.

Anil Ambani in ADAG’s (Anil Dhirubhai Ambani Group) annual general meeting in July this year had expressed interest in shedding up to 20 per cent stake in Reliance Life to raise funds for expansion. The company has completed four years of operation so far and if experience of AMP Sanmar Life Insurance — the company that Reliance Capital acquired in 2005 — is taken into account, total experience of Reliance Life in the insurance industry adds up to more than seven years.

The Insurance Act, 1938, in its present form, however, doesn’t allow companies to launch public offers before they complete 10 years of operation in the country. Section 6AA of the Act allows promoters of life, general and re-insurance companies to divest stake in excess of the 26 per cent of the paid-up equity capital in a phased manner only after 10 years of operation or as may be prescribed by the Central government.

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