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Dec 3, 1999
Lok Sabha clears IRDA Bill amongst others
The lower house of the Parliament, the Lok Sabha, yesterday passed the Insurance Regulatory and Development Authority (IRDA) Bill after the government accepted to incorporate the four amendments proposed by the main opposition party, the Congress. The Bill has yet to be cleared by the Rajya Sabha, the upper house.
With the IRDA Bill having been passed, the private insurance companies would now be eagerly awaiting the guidelines that are to be announced by the newly set up authority. This is expected to happen only in April 2000. Then the process of applications starts and it is anticipated that new companies would be able to offer their products only by the end of the coming year.
The passage of the IRDA Bill marks a watershed in Indian economic history that will break the stranglehold of the public sector companies over the insurance sector. This is expected to lead to an improvement in standards of living (as more people insure themselves and their property against mishaps), better mobilisation of savings and, generally, a more competitive insurance market. While the increase in competition will lead to better pricing of policies, there will also be a more efficient utilisation of the funds mobilised as premia. The funds mobilised, as widely anticipated, are likely to be channeled into the long gestation infrastructure projects.
In what was an unfamiliar show of commitment to clear the pending work before the Parliament, the Foreign Exchange Management (FEMA) Bill and the Prevention of Money Laundering Bill were also passed. While the FEMA bill aims to curb violations of foreign exchange norm, the money laundering Bill has been passed to prohibit dealings in proceeds of crime, directly or indirectly. While FEMA Bill was being taken up, the finance minister categorically stated that India will not rush to full convertibility.
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