Chidambaram confident insurance, pension bills will be passed

Mumbai - Promising more reforms, Finance Minister P Chidambaram on Saturday expressed confidence that the bills on FDI in insurance and pension will be passed in Parliament for which he will soon open dialogue with the opposition parties including the BJP.

“There is a difference of opinion (on the issue of 49 per cent FDI in insurance). I intend to meet with the leaders of opposition and convince them. I can convince the opposition parties that this clause (of raising the FDI cap) can be kept,” he told a press conference on his first visit to the financial capital after taking over as Finance Minister.

The Minister said that he was convinced that the two amendment bills crucial for the economy bills will be passed by Parliament and sought media’s cooperation in this regard.

Asked by a reporter as to whether there would be more reforms after the second instalment that was announced during the week, he said, “I don’t know why you are saying this is second instalment. There will be more. There will be more issues to be addressed. There will be more.”

Earlier in the day, Mr. Chidambaram met RBI Governor D Subbarao and other top functionaries of the central bank, members of the Sebi board and representatives of mutual funds and financial institutions.

On the Insurance Bill amendment cleared by cabinet, he said, the government had accepted a vast majority of recommendations of the Standing Committee on Finance which, however, suggested that the FDI cap be retained at 26 per cent.

After consulting Insurance Regulatory and Development Authority (IRDA) and market players, the government has come to the conclusion to raise it to 49 per cent.

“So there is a difference of opinion on that. I would have to do my best to convince the principal opposition party as well as the other opposition parties that it is in the best interest of the insurance industry and the people of the country that we must raise the FDI cap from 26 to 49 per cent.

“I intend to do just that. I intend to meet the leaders of the opposition and convince them. I am confident that I can”, he said.

The Minister said if the cap is kept at 26 per cent, no extra capital will flow into the country. The entire additional capital will have to be funded by Indian partners who have said that they don’t have that kind of capital.

“The only way additional capital will come is if you raise the cap to 49 per cent so that foreign partner can bring in more capital,” he said.

Mr. Chidambaram said all insurance companies have supported the IRDA proposal for raising the cap to 49 per cent

On Nifty crash: Sebi, NSE to take appropriate actions

A day after stock market benchmark Nifty witnessed a 900-point flash crash, Mr. Chidambaram said the matter is being investigated and regulator SEBI would take necessary actions in this regard.

Addressing the media after meeting SEBI top officials, he said that he has been told that there was no systemic risk in the capital market and the stock exchange NSE had come out with a statement explaining the incident.

He said the NSE had said it is investigating the matter and market regulator SEBI (Securities and Exchange Board of India) would take necessary actions.

He was replying to queries on fall of about 900 points or close to 16 per cent in Nifty within seconds in a flash crash like situation on Friday morning, which led to a halt in trading at NSE for about 15 minutes.

“I was assured there was no systemic risk,” he said.

Asked further about the issue, the minister on a lighter note said he did not understand the technical issues like ’algo trade and non-algo trade’ and read out the statement issued by NSE yesterday.

The NSE had said there was no technical glitch in its system and blamed the crash on erroneous orders worth over Rs 650 crore for multiple trades by broker Emkay Global in various stocks at low prices on behalf of an “institutional client“.

While NSE said it is investigating into the incident, sources have said market watchdog Sebi had also begun a probe yesterday itself into the ‘flash crash’