The Insurance Regulatory and Development Authority (IRDA) on Thursday notified guidelines for life insurers

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to raise capital via initial public offering or subsequent public fund raising from the equity markets.

The IRDA has stipulated that life insurance firms must be operating for at least 10 years before planning such fund raising.

The firms must first obtain IRDA's nod before seeking the approval of the capital markets regulator, the Securities and Exchange Board of India, IRDA said in a document posted on its website.

The IRDA's approval will be valid for a year and insurers will need to file initial papers for their public issues with SEBI within that period.

India, which opened up its insurance sector to private and foreign players in 2000, caps foreign holding at 26 percent in these companies.

Life insurance penetration in India is about 4 percent of the gross domestic product, in terms of total premiums underwritten in a year, compared with 2.4 percent in China and about 13.5 percent in Britain.

Industry executives have said the outlook for the business remains bright in an under-insured country of more than a billion people.

State-owned Life Insurance Corporation of India was once the only option for the world's second-most populous country.

Now, two dozen players including ICICI Prudential Life Insurance, HDFC Standard Life Insurance, Aviva Life Insurance Company and Bajaj Allianz Life Insurance vie for a bigger share of the insurance market in India and most of these are in joint venture with foreign partners.