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The Executive Committee of State Bank of India’s Central Board has authorised divestment of the bank’s stake in SBI Life Insurance by up to 10 per cent.
Currently, SBI has 74 per cent stake in SBI Life Insurance. The balance is held by BNP Paribas Cardiff.
On March 26, SBI, had informed BSE that it has decided to dilute its stake in SBI General Insurance from 74 per cent to 51 per cent in favour of joint venture partner Insurance Australia Group (IAG).
The proposed stake dilution by SBI is consequent upon the promulgation of the Insurance Laws (Amendment) Ordinance, 2014 and subsequently passed by both Houses of Parliament.
The Insurance Laws (Amendment) Act 2015 provides for enhancement of foreign investment cap in an Indian insurance company from 26 per cent to an explicitly composite limit of 49 per cent with the safeguard of Indian ownership and control.
In addition to the provisions for enhanced foreign equity, the amended law will enable raising capital through new and innovative instruments under supervision of the Insurance Regulatory and Development Authority of India.
“Greater availability of capital for the capital intensive insurance sector would lead to greater distribution reach to under/un-served areas, more innovative product formulations to meet diverse insurance needs of citizens, efficient service delivery through improved distribution technology and enhanced customer service standards,” the Finance Ministry said in a statement in March.
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