On Thursday, IRDA notified guidelines for life insuring companies to raise capital through IPO.
As per the IRDA notifications, only those insurers having a 10 years track record can raise the capital but the companies must first receive IRDA's approval and after that they have to seek the approval of SEBI.
The IRDA's approval will be effectual for one year and insuring companies will be required to file their papers for IPO within that period with SEBI.
Besides having a track record of 10 years, IRDA will also assess the applicants on certain other criteria such as the company's financial strength, history of compliance with regulative requirements, corporate governance and solvency margin.
Although the regulations have not defined the limit below which domestic promoters of the insuring firms cannot dilute their stake, the IRDA has held back its discretional powers to determine how much, the promoters can dilute their shareholding.
Presently, FDI is allowed up to 26% in a life insurance company. So, a domestic promoter can have equal to 74% stake in a life insurance venture.