All private life insurance companies may be allowed to enter the capital market to raise equity funding before completing 10 years of
operation, provided they fulfill other criteria laid down by market regulator Securities and Exchange Board of India, which apply to any other entity.
Current norms stipulate 10 years of operation before a life insurance can go public by launching an initial public offer (IPO) of shares. But SEBI norms applicable to all firms allow IPOs if firms register net profits for three consecutive years.
Government sources said the Finance Ministry, which is already considering a proposal to this effect, has indicated that it would not take up independent cases for approval but is comfortable with the idea of a general regime that allows IPOs.
However, the government is in no hurry to list public sector behemoth Life Insurance Corporation.
Reliance Life Insurance had sought permission from the Finance Ministry to be able to access the market for funds. However, a senior government official, who asked not to be identified, said that the issue would not be taken up on a case-by-case basis.
“We do not want to take up the issue of allowing life insurers to tap the market on a case –to-case basis. We are in favour of allowing all companies to be able to tap the capital market,” the official said, adding that the move would bring in more transparency in their functioning.
SEBI will have to frame the disclosure norms for these companies when they tap the equity market.