IPO guidelines for life insurers to be ready this fiscal: IRDA
Insurance watchdog IRDA on Friday said the guidelines for public float of life insurance companies will be ready this fiscal, while the non-life may take more time.
"Initial Public Offering (IPO) guidelines for life insurance companies will be out soon. Certainly before this fiscal. Non-life will take time," Insurance Regulatory Authority of India (IRDA) Chairman J Hari Narayan told reporters in New Delhi.
In October last year, market regulator Sebi had approved life insurance companies to issue IPOs.
As per the draft guideline compiled by IRDA, insurance companies that are in operation for the last 10 years would only be eligible for coming out with IPOs.
"Companies will meet the 10-year deadline by July-August this year. The 10 years (in business) clause stands. As law stands 10 years is 10 years. Companies can go ahead with the IPO without the passage of Insurance Bill," he said.
Also, the present IPO guidelines of Sebi requires a three years track record of profit for a company to float a public issue.
However, the non-life insurance companies will have to wait a few months to hit the capital market as Irda is in the process of making a formal proposal to Sebi.
Several private sector insurers, including Reliance Life and HDFC Standard Life, have already shown interest in tapping the capital market to augment their resource base.
Though HDFC Standard Life has completed 10 years of operations, Reliance Life does not meet this criteria.
As per the disclosure norms in offer document mandated by Sebi, the insurers would have to come up with disclosure of risk factors specific to the companies.
Also the offer document would have a glossary of terms used in the insurance sector.
Currently, most of the 22 private life insurers and 17 non-life players have foreign partners. The Insurance Act caps foreign direct investment at 26%.