Indian insurance watchdog Insurance Regulatory and Development Authority of India (IRDAI) has reached out to the government to allow insurers to buy more than 10% stake in unlisted firms without approval, Reuters reported, citing sources.

As per existing norms, insurers require approval from the IRDAI to invest in unlisted firms.

Regulatory and industry sources said that IRDAI has proposed that insurers be allowed to have over 10% stake in unlisted entities using over 10% capital from their shareholders’ fund, policyholders’ fund, or funds maintained by a reinsurer.

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

The move is expected to free up billions of dollars of capital for investment in companies, specifically those startups that use technology to increase insurance penetration in the country.

With easier access to investment, the startup sector would get a boost after being impacted by the volatile markets.

The move is also part of efforts to align Indian laws with that of nations such as South Korea, which allows insurers to own fintech subsidiaries and credit rating firms and Canada, where insurers are allowed to own bank holding entities.

Emails sent to IRDAI and the finance minister did not elicit a response, stated the news agency.

IRDAI’s proposal was based on recommendations of a working group comprising the IRDAI officials and leaders of insurance firms.

The amendment to rules would also allow general insurers to provide add-on services to customers such as reward programmes, free entertainment, and music among others.