New Delhi: Within minutes of Parliament approving higher foreign investment in insurance sector, a number of insurers including from Bharti, Reliance, Max and SBI groups said their overseas partners will raise their stakes in respective JVs to 49 percent.
Welcoming the hike from 26 percent to 49 percent, the companies said their foreign partners were keen on a larger equity participation and the move would help attract USD 8-10 billion capital into the industry.
Bharti Group Chairman Sunil Bharti Mittal said "this is a positive development which will bring the much-needed investments for the growth of the insurance industry."
Mittal said France's Axa will "step up their equity investment to 49 percent. Bharti will soon move the application to FIPB as per the new FDI guideline".
"This is a huge positive and is expected to bring in USD 8-10 billion capital in the industry which will in turn help the industry to significantly improve insurance penetration in the country.
"We will be initiating dialogue with our partners in life insurance for increasing their stake and also hope to close the partners for our General insurance and health insurance businesses soon," Reliance Capital CEO Sam Ghosh told PTI.
SBI Life MD and CEO Arijit Basu said "there is clarity and uncertainty is over... We are happy about it".
SBI Life, which is a 74:26 joint venture of State Bank of India and BNP Paribas Cardiff, is in talks with the foreign partner for raising the stake.
"They are interested in hiking the stake.. How much and when it happens will depend on discussions," he said.
Max India Chairman Analjit Singh and HDFC Life MD and CEO Amitabh Chaudhry also said the move will bring in more foreign capital in the near future.
Singh said its JV partner in health insurance venture UK- based Bupa is willing to hike stake in the company and a proposal in this regard is pending with the FIPB.
As regards Max Life Insurance, Singh said, "Lots of conversation is going on with multiple partners. If Mitsui wants to raise stake, that Mitsui's call".
Parliament tonight approved the long-pending Insurance Bill that provides for raising foreign investment cap to 49 percent in the sector.
The controversial Insurance Laws (Amendment) Bill, 2015, which replaced an ordinance promulgated in December last, was passed by voice vote.
Financial Services Secretary Hasmukh Adhia said: "The insurance sector in India will get a big boost because of passing of the insurance legislation in the Parliament today".
"Insurance will become one of India's largest employment generating sector," Singh said.
PNB MetLife MD & CEO Tarun Chugh said, "increasing the FDI cap would deliver significant benefits to the Indian economy."
"At present, the total capital deployed in the life insurance sector is close to Rs 35,000 crores. The FDI in this (assuming 26 percent) is close to Rs 8,700 crores. If 49 percent happens, the sector stands to gain additional Rs 7,800 crores as FDI," Chug said.
"Exact money (flowing in) will depend on valuations (of Indian companies). It will take some time for investment to come in. But couple of billion dollars in the next 12 months is possible," Chaudhry said.
There are number of players who want larger stake and are interested not just in general and health insurance but life side as well, he said.
He also said: "The industry at this stage does need long-term capital for growth and expansion which FDI can bring in."
Royal Sundaram Alliance Insurance Co MD Ajay Bimbhet said: "We can expect a sizeable FDI inflows into the Indian insurance industry. The investments would be channelled towards product innovations and to increase market penetration."
Bharti's Mittal said the passage of the Bill "also underlines the government's commitment to take forward its reform agenda and drive economic growth, while generating employment opportunities."
Max India MD Rahul Khosla said, "In our Life Insurance business, Max Life, we are uniquely placed in the industry since we have no pre committed contractual obligations to dilute our stake.
We therefore have the flexibility to make the right choices at the right time and at the right valuation. All options are open for us and we will carefully evaluate these to optimise our position".
Japan's Mitsui hold 26 percent in Max India Life Insurance.
ICICI Prudential Life Insurance MD and CEO Sandeep Bakhshi said the passage of the Bill indicates the intent of the government to push the economic revival agenda forward.
"As the Indian insurance industry expands there will be a need for additional capital in-order to build this scale. The increased FDI limit will provide the much needed flexibility to raise this capital. Customers too will benefit as it will translate into delivery of better products and services to them," Bakhshi said.
Bajaj Capital MD Sanjiv Bajaj said it will play a great role in determining the future of insurance industry and its growth.
SBI Chairperson Arundhati Bhattacharya said: "With financial inclusion proceedings in full force, the timing of increase in limit for FDI in insurance sector is a blessing in disguise. In our estimate, the FDI limit hike in insurance could result in immediate inflow of around Rs 20,000 crore. Furthermore, FDI hike in insurance is de jure increase in FDI limits for pension sector also."
Lauding the passage of insurance bill, ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar said: "It a welcome and was much awaited. This will unleash one more source of capital flow in the country."
Speaking about her group companies, Kochhar said: "There are multiple options and all options are open."
Sandeep Bakhshi, MD and CEO, ICICI Prudential Life Insurance said: "It indicates the intent of the government to push the economic revival agenda forward. As the Indian insurance industry expands there will be a need for additional capital in-order to build this scale.
"The increased FDI limit will provide the much needed flexibility to raise this capital. Customers too will benefit as it will translate into delivery of better products and services to them."
Star Health and Allied Insurance Co Chairman-cum-Managing Director V Jagannathan said: "The inflow of fresh capital will help us innovate the health insurance products and expand its offering to the last mile serving the national health agenda."
Terming the passage of bill as kick start for reform process, Edelweiss Tokio Life Insurance MD and CEO Deepak Mittal said: "With this move some kind of political consensus has emerged and we see this as an important event in kick starting the reform process again."
Consultancy firm KPMG added that it will pave way for reinsurance companies to enter the market, Partner Management Consulting Shashwat Sharma said,"The Insurance Bill also paves way for reinsurance companies to enter the market by opening branches."
Earlier they were allowed to operate only through a JV with 26 per cent cap on FDI, but now the new Bill will help reinsurance business evolve as more experienced reinsurance companies come as a foreign branches, Sharma said.
