Money & Banking

IRDAI looking at allowing PE firms to buy stakes in insurance companies

Our Bureau Mumbai | Updated on January 10, 2018

Decision likely in a month’s time, says TS Vijayan

The Insurance Regulatory Development Authority of India (IRDAI) is examining the possibility of allowing private equity (PE) firms to buy stake in insurance companies, according TS Vijayan, chairman. A decision on this is likely in a month’s time.

“In insurance companies, we look at it in two different ways — investors and promoters, anybody can invest in the company. For promoter, we are studying (as to) what is the feasibility, if at all somebody is coming what are the conditions that need to be in place,” said Vijayan at the Assocham Global Insurance Summit.

The IRDAI chief added that the regulator had set up a team to help come to a decision. He also said IRDAI had just formed a committee for risk based capital model but gave no deadline for its introduction.

The IRDAI is also looking at risk-based supervision. “With the co-operation of insurance companies, we should be able to monitor their result on a very frequent basis and do on-site inspection only when it is required,” said Vijayan.

On insurance companies going for initial public offering (IPO) and the valuation they are getting, the IRDAI chairman said that the regulator is merely looking at the solvency margin and what the shareholder is paying for a share is not its concern.

He said that while rapid changes are happening in many areas, a proactive rather than reactive approach is required, especially in response to the steady growth in the insurance sector.

Published on September 22, 2017

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