New Delhi: The United Progressive Alliance (UPA) Government on Monday brought in Rajya Sabha a Bill seeking to hike foreign investment in the insurance sector, unfazed by stiff opposition by Communist Party of India (CPI-M) members who almost came to blows with senior ministers.
The government, which had kept insurance reforms in cold storage for almost four years in view of strong objections from the Left, introduced the Insurance Laws (Amendment) Bill, 2008, after a high drama.
As Minister of State for Finance PK Bansal rose to introduce the Bill, CPI-M member TK Rangarajan rushed towards him to snatch the copy of the Bill from him.
An agitated External Affairs Minister Pranab Mukherjee pushed the CPI-M member to protect his colleague while another minister Meira Kumar provided a shield to Bansal.
In the din, Deputy Chairman K Rahman Khan adjourned the House till 1400 hrs IST.
The CPI-M, helped by new-found friends All India Anna Dravida Munnetra Kazhagam (AIADMK) and Telugu Desam Party (TDP), appeared determined to stall the introduction of the Bill by gathering in the well when the House met after two adjournments in the Question Hour over Minorities Minister AR Antulay issue.
The Bill proposes to raise foreign equity in Indian insurance companies from 26 per cent to 49 per cent. It also seeks to allow nationalised general insurance firms to raise money from the market.
The insurance Bill seeks to remove the restrictions of divestment of equity by Indian promoters of insurance companies.
Under the existing provisions, the promoters are required to "divest 26 per cent or such other (equity), prescribed percentage in the manner and period prescribed by the central government."
The proposed provisions will make a distinction between a 'beneficiary' nominee and 'collector' nominee in life insurance policies.
As regards insurance agents, the statement of object and reasons said, Insurance Regulatory and Development Authority (IRDA) will "regulate their eligibility, qualifications and other aspects".
The Bill also prescribes a fine up to Rs 25 crore and imprisonment up to 10 years for carrying on insurance business without registration.
In addition, there will also be a provision for penalty up to Rs 25 crore in case an insurer fails to comply with the obligations regarding rural, social sector or motor vehicle insurance.
The Bill also provides for regulation regarding opening and closing of foreign and domestic branches, payment of commission and control of management expenses.
The other important provisions include introduction of a system of permanent registration of insurance companies. The IRDA, however, will have the right to cancel registration on breach of specified conditions.