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Cabinet okays insurance bill, may send it to RS next week

The Cabinet, headed by Prime Minister Narendra Modi, approved incorporation of amendments suggested by a Parliamentary select panel in the Insurance Laws (Amendment) Bill, 2008, sources said. The Rajya Sabha is likely to take up the Bill for consideration and passage next week.

Earlier on Wednesday, the Select Committee in its report to the Rajya Sabha had suggested hike in composite foreign investment limit in insurance sector to 49 per cent which would include Foreign Direct Investment (FDI) as well as portfolio investment. At present only 26 per cent FDI is allowed in private sector insurance companies. The hike in foreign investment limit is estimated to attract about Rs 25,000 crore of overseas funds in the sector.

"The committee recommends that the composite cap of 49 per cent should be inclusive of all forms of foreign direct investment and foreign portfolio investments," the report said. The Congress support for the Insurance Laws (Amendment) Bill, 2008, is crucial as the ruling NDA does not have majority in the Upper House.

The bill, which has been pending since 2008, may not have a smooth ride in the Rajya Sabha with certain political parties opposing further opening of the insurance sector to foreign investment.

... Allows cut in Govt stake in public sector banks to  52%

The government on Wednesday allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet Basel III capital adequacy norms. “The quantum of capital support needed by banks is huge, which cannot be funded by budgetary support alone,” an official statement said, detailing the decision taken by the Cabinet, headed by Prime Minister, to allow PSBs to raise equity capital from market. The Cabinet asked the PSBs to broadbase retail shareholding while going in for the fund raising. Out of 27 PSBs, government controls 22 through majority holding. In the remaining 5 banks, state-run SBI holds majority stake.
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