Here is the uncensored, unedited view of Aviva India…..my views you have already read right? well read on….
Union Budget – Reaction from TR Ramachandran, CEO & MD, Aviva India
Mr. Finance Minister, through this budget, has tried to give a big push to infrastructure, incentivise savings through financial instruments and property particularly at the lower end, and focus on the inclusive growth agenda. It is a commendable effort, at finding balance. The focus on financial markets was clear with positives for capital markets, mutual funds, banking and Insurance. Specifically on Insurance, in continuation of the inclusion theme, the budget has announced key steps that will increase the distribution penetration of both life and general insurance in the hinterland and rural geographies. Automatic approval for opening branches in tier II cities and smaller towns as well as the presence of one LIC and one PSU GI office in towns with population of over 10,000 will provide this essential outreach. The simplification through uniform KYC norms for banks and insurers, allowing banks to act as insurance brokers and allowing banking correspondents to sell micro insurance products will be another step towards expanding the insurance distribution network across India. The relaxation in insurance premium rates for disabled people, further expanding group insurance net to domestic workers and anganwadi workers and the extension of RSBY to larger base of sanitation workers, mine workers, rag-pickers and auto rickshaw drivers and pullers will promote greater financial inclusion. While these are positive steps, the FM has missed an opportunity to both give a much needed fillip to the Insurance sector, and channelize retail investments into the stockmarket and garner long tenure funding for infrastructure and allied sectors by not changing the 80C limits or carving our additional amounts of exemption for Insurance – as was widely expected.
Interestingly, the Budget speaks about increase in foreign investment through FII and FDI routes, and while the Government has changed the FDI norms in retail sector, the Insurance sector is still at 26%. The industry would be keenly looking at the budget session for debate and decision on the Insurance bill.
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