LIC chief backs 49% FDI in insurance; MPs smell rat
15 Sept 2014 4:17 AM IST
Public sector insurer LIC has lent its support to government’s proposal of raising the FDI limit in the sector to 49 per cent, a move criticised by a section of the select committee that is evaluating amendments to a Bill pending for four years in the Rajya Sabha.
Sources said that LIC Chairman S K Roy, while presenting the view of the country’s largest insurer at a recent meeting of the select committee, was in favour of raising the cap from 26 per cent now, which according to some members is ‘politically motivated’.
Agitated members asked Roy about his company’s stance earlier and what made it change its stance. Roy, the source said, ‘I don’t know what LIC’s stance was. I will check and let you know.’ This led to sharp exchanges between the Committee Chairman Chandan Mitra and Trinamool Congress member Derek O’Brien. While Mitra tried to pacify members, saying that the issue was not important, O’Brien said that he was sensing something ‘politically fishy’ with LIC supporting the proposal.
Roy is the only head among public sector insurers to make a presentation before the 15-member panel. He refused to comment on what had transpired during the meeting. LIC was the sole insurer in the country before the opening up of the sector to foreign investment and since then, it has lost its market share which now stands at 75 per cent.
O’Brien, however, also declined to comment when contacted but said, ‘If this information is true, then the LIC chairman was trying to please his bosses in the BJP and the BJP is using him for political purposes.’ He also said that his party is not in favour of raising the FDI cap in the insurance sector.
The Trinamool Congress leader added that he would write to the chairman of the committee, asking him to incorporate the views of the different unions representing the public sector insurance companies before drafting the final report. O’Brien pointed out that the opening up of the sector has not yielded any ‘significant’ result, with just Rs 7,700-crore foreign funds coming into the sector in the last 15 years and market penetration rising to 4.6 per cent from 1.2 per cent during the period.
Sources said that three members from Congress and one each from the TMC, CPI(M) and JD(U) expressed reservations on the passage of the Bill. Six members from BJP, SAD and BJD were in favour and two members from the AIADMK and BSP were still undecided. The SP member was not present at any of the two meetings held so far. However, this information could not be individually verified.
After the first meeting of the panel earlier this month, Committee Chairman Chandan Mitra had said, ‘We will try to submit our report on the Insurance Bill by the third week of November.’ The panel, headed by the senior BJP leader, also recorded the ‘oral evidence’ of the representatives of the General Insurance Council, a body set up by insurance regulator IRDA. Besides, top officials of the ministries of corporate affairs, finance, law & justice, and Commerce presented their views on the proposed Bill.
The MPs of the panel are Mukhtar Abbas Naqvi and Jagat Prakash Nadda of the BJP, Anand Sharma, B K Hariprasad and JD Seelam of the Congress, Satish Chandra Misra of the BSP, K C Tyagi of the JD (U), Derek O’Brien of the TMC, V Maitreyan of the AIADMK, Naresh Gujral of the SAD, Ram Gopal Yadav of the SP, Kalpataru Das of the BJD, P Rajiv of the CPI (M) and Independent MP Rajiv Chandrasekhar.
The Insurance Laws (Amendment) Bill 2008 seeks to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the IRDA Act, 1999.
Sources said that LIC Chairman S K Roy, while presenting the view of the country’s largest insurer at a recent meeting of the select committee, was in favour of raising the cap from 26 per cent now, which according to some members is ‘politically motivated’.
Agitated members asked Roy about his company’s stance earlier and what made it change its stance. Roy, the source said, ‘I don’t know what LIC’s stance was. I will check and let you know.’ This led to sharp exchanges between the Committee Chairman Chandan Mitra and Trinamool Congress member Derek O’Brien. While Mitra tried to pacify members, saying that the issue was not important, O’Brien said that he was sensing something ‘politically fishy’ with LIC supporting the proposal.
Roy is the only head among public sector insurers to make a presentation before the 15-member panel. He refused to comment on what had transpired during the meeting. LIC was the sole insurer in the country before the opening up of the sector to foreign investment and since then, it has lost its market share which now stands at 75 per cent.
O’Brien, however, also declined to comment when contacted but said, ‘If this information is true, then the LIC chairman was trying to please his bosses in the BJP and the BJP is using him for political purposes.’ He also said that his party is not in favour of raising the FDI cap in the insurance sector.
The Trinamool Congress leader added that he would write to the chairman of the committee, asking him to incorporate the views of the different unions representing the public sector insurance companies before drafting the final report. O’Brien pointed out that the opening up of the sector has not yielded any ‘significant’ result, with just Rs 7,700-crore foreign funds coming into the sector in the last 15 years and market penetration rising to 4.6 per cent from 1.2 per cent during the period.
Sources said that three members from Congress and one each from the TMC, CPI(M) and JD(U) expressed reservations on the passage of the Bill. Six members from BJP, SAD and BJD were in favour and two members from the AIADMK and BSP were still undecided. The SP member was not present at any of the two meetings held so far. However, this information could not be individually verified.
After the first meeting of the panel earlier this month, Committee Chairman Chandan Mitra had said, ‘We will try to submit our report on the Insurance Bill by the third week of November.’ The panel, headed by the senior BJP leader, also recorded the ‘oral evidence’ of the representatives of the General Insurance Council, a body set up by insurance regulator IRDA. Besides, top officials of the ministries of corporate affairs, finance, law & justice, and Commerce presented their views on the proposed Bill.
The MPs of the panel are Mukhtar Abbas Naqvi and Jagat Prakash Nadda of the BJP, Anand Sharma, B K Hariprasad and JD Seelam of the Congress, Satish Chandra Misra of the BSP, K C Tyagi of the JD (U), Derek O’Brien of the TMC, V Maitreyan of the AIADMK, Naresh Gujral of the SAD, Ram Gopal Yadav of the SP, Kalpataru Das of the BJD, P Rajiv of the CPI (M) and Independent MP Rajiv Chandrasekhar.
The Insurance Laws (Amendment) Bill 2008 seeks to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the IRDA Act, 1999.
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