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Insurance Regulatory and Development Authority (IRDA) Chairman J Hari Narayan said the regulatory clause of 10-year lock-in before equity stake sale does not apply for Reliance Life-Nippon Deal.
"This law applies only in cases of stake divestment and the regulator will soon come out with guidelines for induction of new promoter," Narayan told CNBC-TV18.
Japanese insurance firm Nippon Life Insurance Company -- sixth largest life insurer in the world -- plans to acquire 26% stake in Reliance Life Insurance for $680 million. The total value of Reliance Life Insurance is $2.6 billion according to this deal.
Reliance Capital currently holds 100% stake in the company.
As per the regulatory norms, an insurance company must complete 10 years of operations in the country for offloading 26% stake, which is the highest limit allowed. While, Anil Ambani-owned Reliance Life would comply with the regulatory norms only in 2012 by completing 10 years of operations in the country.
He also believes that increase in foreign direct investment to 49% from existing 26% would enable many insurance companies to do better job as companies are struggling due to lack of adequate capital. Source : Contify Insurance
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