Mumbai: Even as the final IPO norms for life insurance companies are still awaited and most players are not keen to hit the capital markets to raise funds, the sectoral regulator IRDA hinted at making it mandatory for them to go public.
"The (Insurance) Act doesn't stipulate companies to go public, but the regulator might," Insurance Regulatory and Development Authority (IRDA) J Hari Narayan told reporters on the sidelines of an industry summit.
He said the industry is competing with other sectors for capital and the IPO would help them to raise some. "The capital has to grow. We need capital," Narayan said.
He also said the final IPO guidelines for the life insurance will be ready by the end of the month.
However, none of the existing laws, be they the Companies Act or the Sebi or IRDA Acts, make it mandatory for any company in any sector to get listed. If the Irda wants to have its way, then all these Acts mentioned above will have to be amended, besides the LIC Act.
LIC, despite being the nation's largest financial entity, is fully owned by the government and is not a company under the Companies Act but by is governed by the LIC Act.
Interestingly, among the 22 private life players only a few like HDFC Standard Life and Reliance Life, are keen to tap the primary markets to mop up funds. Most of the players says that they are not looking to raise capital.
Last month, IRDA had released a set of draft guidelines for insurance companies to raise funds through public offers.
As per the draft norms, only those with 10 years of operations and strong financials would be allowed to access the capital markets.
Insurance firms planning public offers have to seek 'formal approval' from Irda and then approach the Sebi for final approval, the draft norms had said. As part of the eligibility criteria, the insurers should have maintained the prescribed regulatory solvency margin during the preceding six quarters, it said.