TABLE OF CONTENTS Insurance is completely in the public sector, and business is conducted by the Life Insurance Corporation of India (LIC) and the General Insurance Corporation of India (GIC) and its subsidiaries. In 1995-96, LIC had a premium income of Rs 141.81 billion, while GIC and its subsidiaries collected direct premiums of Rs 63.70 billion in the same period.
However, insurance companies are required to place almost 80 per cent of their funds in government securities, which means that resources are not being put to optimal use. Returns to policyholders are low, service is poor and thus their ability to tap the vast potential of the insurance market has been limited. This has proved to be a severe damper on long-term finance for projects, especially infrastructure projects. Recent governments agree that the only way to realize the full potential of this sector is to allow private firms to compete. The country has also been facing increasingpressure from foreign governments to open up insurance to foreign firms - a move that the current government has so far ruled out.
High financing costs in India have also led major Indian companies to tap international markets for additional funds through public offers. This is done subject to government permission. Global Depository Receipts (GDRs) or other Euroissues are issued by a depository (such as a foreign bank) and then listed on an international stock exchange, while the underlying Indian shares are held by a custodian in India. There is now no lock-in...
