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Insurers may face rural quota under new law
Insurance companies are likely to be required to meet a part of their total business from rural markets, in the same manner as public sector banks, under new changes proposed to insurance law set to be introduced in parliament this year.
Insurance companies are likely to be required to meet a part of their total business from rural markets, in the same manner as public sector banks, under new changes proposed to insurance law set to be introduced in parliament this year.
The bill, which faced fierce opposition in the Rajya Sabha when it was introduced in 2008, is at present under the consideration of the Parliamentary Standing Committee.
As per government norms, state-owned banks are required to meet the set targets for the priority sector. “The government could follow the same model in the insurance sector as this would also increase penetration and expand the scope of financial inclusion, on which the government is keen,” a government official, who did not wish to be identified, told Hindustan Times.
The Insurance Regulatory and Development Authority (IRDA) has previously expressed concern that insurers have preferred to focus on urban areas, at the cost of semi-urban and rural markets.
The Standing Committee is being headed by senior BJP leader Yashwant Sinha. Several members of the panel are opposed another important provision of the insurance bill — raising the limit of foreign direct investment in insurance companies to 49% from 26% now.
The proposal, originally mooted during the NDA regime, faced stiff opposition form Left parties, which were part of the coalition in the first UPA government that had introduced the bill in 2008.
