PM Modi: Privatisation of two public sector banks and rise of FDI cap to 75% to boast insurance market 

Prime Minister Narendra Modi has introduced some policies and changes in tradition to boost the economy of banks, especially in the insurance sector. The PM appreciated the new approach taken by the Finance Ministry, he said 75% growth of FDI in insurance will definitely prevail in a long team.  

As per a report, the hike in FDI is a very good thing for life insurance especially. The insurance sector is a highly capital intensive industry and considering the kind of solvency margins that are required, it is necessary that a lot of capital inflow should be maintained in the market. The Indian promoters will have some kind of limitations and competitions as far as their own involvement in this industry is concerned because they are not only insurance companies.


The second thing which is very positive is that a lot of good private players from foreign countries held back because they were concerned about the control and governance issues. Their concerns have been addressed. If we really want to increase the penetration intensity in the country, we need a lot more insurance companies in life as well as in the general sector.

Further, the privatization of two public banks was another topic that was extensively spoken about by the Prime Minister. According to some experts, “This being the scenario, what is there is a public sector bank, except perhaps State Bank of India, and to an extent Bank of Baroda, for a prospective buyer to feel that he has before him a potentially viable asset which can be turned around to become a profitable one?” 

First, does the economy need the business model that public sector banks represent? They served a historical purpose but in the business of taking banking to the unbanked, and these have far lower levels of stressed assets than the average commercial bank.

Though the opposition has found another topic to drag around the government as privatisation is currently not very well accepted in our country