With capital becoming scarce due to the global economic meltdown, ICICI Prudential today said that consolidation and raising FDI limit to 49 per cent were the way forward to fuel the life insurance business.
With capital becoming scarce due to the global economic meltdown, ICICI Prudential today said that consolidation and raising FDI limit to 49 per cent were the way forward to fuel the life insurance business.
"Now access to capital is shrinking and this is likely to continue for the next six months to one year...consolidation makes sense in this scenario," ICICI Prudential Life Insurance's Managing Director, Shikha Sharma, told PTI.
In every business, there will normally be four to five major players and 10-12 players altogether. There is, therefore, an immense potential for consolidation within the industry here, Sharma said.
Margins in India were thinner and customers more value-conscious and hence, companies needed scale to remain competitive. "In this scenario, consolidation makes sense," she said.
While ICICI Prudential Life was ready for acquisitions, there were no immediate proposals, she said, adding that the company was, however, always ready to consider any proposal that provided some synergy benefit to it.
On the need for hiking FDI limit to 49 per cent from the present 26 per cent, Sharma said that this would help the industry to access global capital.
"This is a capital intensive business and access to capital is critical for growth. Access to global capital is, therefore, very important and policy-makers must do what is good for the industry and market," Sharma said.
She did not subscribe to the view that the majority in the industry were against raising the FDI limit to 49 per cent. "There may be one or two players against it but most major players were for hiking the FDI limit," she said.
Presently, when economic growth was slowing, it was all the more important to have access to global capital, she said. "When the market is booming, people can come in and make their business models work.
But when growth slows, the market becomes maturer. Now the market is depressed and so there is a need to access global capital," she said.
According to Sharma, global capital may not be available to all players and investors would invest in only those companies where they see value.
"In an euphoric market, everybody can participate but now in this depressed scenario, investors will look at value," she said.u00a0
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