New Delhi:Foreign direct investment in insurance companies in the private sector will be raised to 49 percent through a bill to be tabled in parliament, it was announced here Friday.

Through another bill, the equity of the state-owned Life Insurance Corporation (LIC) will be raised from Rs.50 million to Rs.1 billion, Finance Minister P. Chidambaram told reporters after a cabinet meeting chaired by Prime Minister Manmohan Singh.

"The union cabinet today gave its approval for introduction of the Insurance (Amendment) Bill 2008 for amendment to Insurance Act, 1938, General Insurance Business (Nationalisation) Act, 1972 and Insurance Regulatory and Development Authority Act, 1999 in the Rajya Sabha in the basis of the recommendations made by a GoM (group of ministers)," Chidambaram said.

These bills will enable the raising of the FDI cap among private players from 26 percent to 49 percent, he added.

"The cabinet also decided to introduce the Life Insurance Corporation (Amendment) Bill, 2008 in the Lok Sabha on the basis of the recommendations made by GoM," the finance minister said.

This bill will raise the equity of the LIC from Rs.50 million to Rs.1 billion.

"The amendments will remove archaic and redundant provisions in the legislations and incorporate certain provisions to provide IRDA with flexibility to discharge its functions effectively and efficiently," Chidambaram said.