New Delhi: India’s Insurance Regulatory and Development Authority (IRDAI) has proposed to the government that insurers be permitted to buy more than 10% of unlisted enterprises without seeking approval, a move that could open up new funding routes for startups in Asia’s third largest economy, according to regulatory and industry sources.

Currently, insurers cannot participate in unlisted firms without the consent of India’s Insurance Regulatory and Development Authority (IRDAI).

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According to the two sources asked to remain anonymous, IRDAI has sent a proposal to the government that would permit insurers to purchase more than a 10% stake in unlisted companies using more than a 10% portion of the funds in their shareholders fund, policyholders fund, or funds managed by a reinsurance company.

“The finance ministry is considering IRDAI’s suggestion, and is looking to make the changes in the law,” one source said.

Such a change might make billions of dollars available for investments in unlisted businesses, particularly companies using technology to expand insurance coverage in one of the world’s least insured nations.

A startup industry that has been adversely affected by the global IT market downturn could benefit from easier access to funding.

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The amendment aims to align Indian law with those of nations like South Korea, where insurance companies are allowed to own fintech subsidiaries and credit information companies, and Canada, where insurance companies are allowed to control bank holding companies.

The modification would also enable non-life insurance companies that offer health and general insurance policies to provide supplemental benefits already provided by their international competitors, such as rewards programmes, exclusive lounge access, free entertainment, and music.

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