Union Finance Minister P. Chidambaram, on Saturday, said he would convince the Opposition parties to back the government proposal on 49 per cent foreign direct investment (FDI) in the insurance sector.
“Most insurance companies promoted by public sector banks are in need of massive capital infusion. When the banks themselves are facing funds crunch for their own capitalisation, how can you expect them to pump in funds?” Mr. Chidambaram asked, while interacting with the media here.
Mr. Chidambaram informed presspersons that he would be discussing the issue with other political parties over the next few days. “I am quite confident of convincing them to back the proposal,” he added.
He met with financial regulators, including the Reserve Bank of India and the Securities and Exchange Board of India, investors, including the Association of Mutual Funds in India, and FIIs during his first visit here.
The Finance Minister stressed that the insurance sector needed huge money, and if the FDI limit was kept at 26 per cent, no additional funds would flow in. According to him, raising the FDI limit to 49 per cent would bring in foreign funds, which would benefit the domestic Indian insurance industry.
The Insurance Regulatory Development Authority and all insurance companies (life and general) had backed the 49 per cent FDI proposal, he added.
