Within minutes of Parliament approving higher foreign investment in insurance sector, a number of insurers including from Bharti, Reliance, Max and SBI groups said their overseas partners will raise their stakes in respective JVs to 49 per cent.
Welcoming the hike from 26 per cent to 49 per cent, the companies said their foreign partners were keen on a larger equity participation and the move would help attract $ 8-10 billion capital into the industry.
Bharti Group Chairman Sunil Bharti Mittal said "this is a positive development which will bring the much-needed investments for the growth of the insurance industry."
Mittal said France's Axa will "step up their equity investment to 49 per cent. Bharti will soon move the application to FIPB as per the new FDI guideline".
"This is a huge positive and is expected to bring in $ 8-10 billion capital in the industry which will in turn help the industry to significantly improve insurance penetration in the country.
"We will be initiating dialogue with our partners in life insurance for increasing their stake and also hope to close the partners for our General insurance and health insurance businesses soon," Reliance Capital CEO Sam Ghosh told PTI.
SBI Life MD and CEO Arijit Basu said "there is clarity and uncertainty is over... We are happy about it".
SBI Life, which is a 74:26 joint venture of State Bank of IndiaBSE -0.30 % and BNP Paribas Cardiff, is in talks with the foreign partner for raising the stake.
"They are interested in hiking the stake.. How much and when it happens will depend on discussions," he said.
Max India Chairman Analjit Singh and HDFC Life MD and CEO Amitabh Chaudhry also said the move will bring in more foreign capital in the near future.
Singh said its JV partner in health insurance venture UK- based Bupa is willing to hike stake in the company and a proposal in this regard is pending with the FIPB.
As regards Max Life Insurance, Singh said, "Lots of conversation is going on with multiple partners. If Mitsui wants to raise stake, that Mitsui's call".
Parliament tonight approved the long-pending Insurance Bill that provides for raising foreign investment cap to 49 per cent in the sector.
The controversial Insurance Laws (Amendment) Bill, 2015, which replaced an ordinance promulgated in December last, was passed by voice vote.
Financial Services Secretary Hasmukh Adhia said: "The insurance sector in India will get a big boost because of passing of the insurance legislation in the Parliament today".
"Insurance will become one of India's largest employment generating sector," Singh said.
PNB MetLife MD & CEO Tarun Chugh said, "increasing the FDI cap would deliver significant benefits to the Indian economy."
"At present, the total capital deployed in the life insurance sector is close to Rs 35,000 crores. The FDI in this (assuming 26 per cent) is close to Rs 8,700 crores. If 49 per cent happens, the sector stands to gain additional Rs 7,800 crores as FDI," Chug said.
"Exact money (flowing in) will depend on valuations (of Indian companies). It will take some time for investment to come in. But couple of billion dollars in the next 12 months is possible," Chaudhry said.
There are number of players who want larger stake and are interested not just in general and health insurance but life side as well, he said.
He also said: "The industry at this stage does need long-term capital for growth and expansion which FDI can bring in."
Royal Sundaram Alliance Insurance Co MD Ajay Bimbhet said: "We can expect a sizeable FDI inflows into the Indian insurance industry. The investments would be channelled towards product innovations and to increase market penetration."
Bharti's Mittal said the passage of the Bill "also underlines the government's commitment to take forward its reform agenda and drive economic growth, while generating employment opportunities."
Max India MD Rahul Khosla said, "In our Life Insurance business, Max Life, we are uniquely placed in the industry since we have no pre committed contractual obligations to dilute our stake.
We therefore have the flexibility to make the right choices at the right time and at the right valuation. All options are open for us and we will carefully evaluate these to optimise our position".
Japan's Mitsui hold 26 per cent in Max India Life Insurance.
ICICI Prudential Life Insurance MD and CEO Sandeep Bakhshi said the passage of the Bill indicates the intent of the government to push the economic revival agenda forward.
"As the Indian insurance industry expands there will be a need for additional capital in-order to build this scale. The increased FDI limit will provide the much needed flexibility to raise this capital. Customers too will benefit as it will translate into delivery of better products and services to them," Bakhshi said.
Bajaj Capital MD Sanjiv Bajaj said it will play a great role in determining the future of insurance industry and its growth.