51% FDI cap for health insurance

By agencies   |   Tuesday, 29 November 2005, 08:00 Hrs
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NEW DELHI: Insurance Regulator the IRDA has said it is in favor of a 51 percent foreign investment limit for health insurance companies.

"The taskforce has suggested a 51 percent foreign capital limit and a minimum capital requirement of $11.36 million. The matter is under discussion with the government," IRDA member CR Murlidharan said.

Presently the FDI cap for insurance is restricted to 26 percent and Finance Minister P Chidambaram has said it can be raised to 49 percent. However the government has not been able to increase the cap due to opposition from the communist parties that are a part of central government.

Foreign insurance companies are of the opinion that since the health insurance sector is not capital intensive, there should be a lower capital requirement for setting up standalone health insurance companies.

A number of international health insurance majors had earlier proposed to enter the Indian market but did not seek licenses due to the minimum capital requirement being set at $22.72 million.

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