Mumbai: Shares of companies that run insurance business rose by as much as 4 percent after the Cabinet today gave go-ahead to FDI cap hike in the sector to 49 percent with a rider that management control will remain in the hands of Indian promoters.
Reliance Capital shares went up by 4.05 percent, while Max India gained 0.91 percent on the BSE.
Similarly, shares of Aditya Birla Nuvo rose by 0.56 percent.
The Cabinet today gave go-ahead to FDI cap hike in insurance to 49 percent with a rider that management control will remain in the hands of Indian promoters, thus paving way for inflow of as much as Rs 25,000 crore foreign funds in the sector.
The approval to hike the FDI limit from the current 26 percent, a proposal which has been pending since 2008, is expected to attract long term capital, besides improving the overall investment climate.
This is the first major reform initiative by the Narendra Modi-led NDA government, and has raised expectations of further relaxation of FDI norms in sectors like defence and railways.
With the Cabinet approving the amendments to the long pending Insurance Laws (Amendment) Bill, it will now be taken up by Parliament.
First Published: Thursday, July 24, 2014, 20:23