Day 1: 2 cos approach IRDA

ICICI, which is the first Indian company to list on New York Stock Exchange (NYSE), is taking the entire 74 per cent stipulated for domestic company while Prudential take the remaining 26 per cent.

Sources said Dabur has also taken the 74 per cent stipulated under the IRDA Act and the US partner will take the remaining 26 per cent. The IRDA Act allows only 26 per cent stake for foreign companies in their insurance foray in India. Derek Stott, Chief of Prudential in India, however, declined to comment on the matter. Both ICICI and Prudential had announced the tie up sometime back to enter the life insurance after opening up of the sector.

Other companies like Royal & Sun-TVS Sundaram, HDFC-Standard Life, Max-New York Life, ING-Vysya, Kotak Mahindra, are also expected to file for applications in the next few weeks, top industry officials said.

Foreign insurance companies like Chubb are currently in the process of negotiations with Indian companies to enter the sector.

The rules stipulate companies to have a minimum paid-up capital of Rs 100 crore for entering the life and non-life sector.

Last month, Government had notified first set of rules for the insurance sector which included life, non-life, re-insurance, social and rural sector obligations among others. The next set of rules relating to surveyors, accounting norms, brokerages are expected to be notified shortly.

The Reserve Bank of India (RBI) had invited applications from the domestic banks which want to enter the insurance sector. This comes in the wake of the government notification specifying insurance as a permissible form of business that could be undertaken by banks under Section 6(1)(o) of the Banking Regulation Act, 1949.

Earlier, the RBI had issued guidelines regarding the entry of banks into insurance business, which had said that the business will not be permitted to be undertaken departmentally by the bank. The maximum stake banks are allowed in selective cases is pegged at 74 per cent by the RBI.

The IRDA Act, approved by Parliament, allows foreign companies to take a maximum of 26 per cent in the Indian insurance ventures. All the global players entering the domestic insurance sector are taking the maximum permissible limit of 26 per cent in its ventures in India.

The rules for life, non-life, re-insurance, social and rural sector obligations are among the first set of 10 guidelines notified by the government. Though re-insurance guidelines are notified, IRDA has not called for licence applications in the sector as no companies have announced plans to enter the sector in India.

"Re-insurance business depends on the insurance business developing in the country and many companies may be looking at how the new entrants develop the sector to enter the re-insurance segment," an IRDA official said. The IRDA Act requires re-insurance companies to have a minimum paid-up capital of Rs 200 crore.