A parliamentary panel has favoured raising the minimum paid-up capital of state-owned Life Insurance Corporation from Rs 5 crore to Rs 100crore, a move which will bring it on par with private insurers.
The Standing Committee on Finance, however, wanted the government to make it clear that any further increase in the capital beyond Rs 100 crore must also be infused by the government only, instead of the insurer raising it through public offers. It had submitted its report recently in Parliament.
At present, private insurers have to maintain a minimum paid up capital of Rs 100 crore before they get licence as per the Insurance Act, 1938.
However, LIC minimum capital requirement is Rs 5 crore, sought to be increased by Rs 95 crore through the amendment to the Life Insurance Corporation (Amendment) Bill, 2009.
The panel also asked the government to further amend the bill for allowing LIC to raise money through debt and preferential capital. The amendment in its current form restricts LIC to raise capital only by equity, leaving aside these other forms of generating funds.
The committee, headed by BJP MP Murli Manohar Joshi, said, "Rising of the paid-up capital of LIC in line with the provisions of the Insurance Act, 1938 and as applicable to the Life Insurance companies in general May, perhaps is appropriate."
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