The Insurance Regulatory and Development Authority of India (IRDAI) is set to come up with clear-cut guidelines pertaining to management control in insurance firms. Ever since the Foreign Direct Investment (FDI) limit in the insurance sector was hiked from 26% to 49% there has been a lot of buzz about foreign investors wanting to increase their share. Thus, it is important to clear out the ambiguity surrounding matters related to ownership.
IRDAI Chairman, TS Vijayan said, "The Act clearly says that being a major shareholder, the management control should be with the Indian partner. However, we are working on it and the final guidelines will come up shortly on the same. We will bring the guidelines under corporate governance structure."
Certain companies have applied to the Foreign Investment Promotion Board (FIPB) to increase their holding in local joint ventures. However, FIPB is not looking into the management control aspect. It is the IRDAI that has to provide clarity regarding it.
Eight re-insurance companies have also expressed their desire to be a part of the Indian Insurance Industry. Guidelines pertaining to reinsurance companies are expected to be rolled out by the IRDAI by the end of October.