"The Group of Ministers have approved the proposed amendment with certain modifications and the same are to be placed before the Cabinet," Minister of State for Finance P K Bankal said in a reply to a question in the Rajya Sabha.
The government on October 16 had deferred a decision on hiking foreign direct investment (FDI) cap in insurance sector to 49 per cent from 26 per cent, as it is watching for the impact of the global financial crisis.
The proposed changes include amendments in the Insurance Regulatory and Development Authority (IRDA) Act, 1999 and Life Insurance Corporation (LIC) Act, 1956 among others.
A Group of Ministers headed by External Affairs Minister Pranab Mukherjee had cleared the proposal last month for revising the FDI cap in insurance sector.
However, the global financial crisis has deepened since then. American International Group (AIG) and Fortis are among the major financial institutions which required bailouts in the last few weeks due to financial ill-health.
AIG is minority partner in two separate joint ventures for life and non-life insurance with the Tatas while Fortis has partnership with state-run IDBI Bank.
The UPA regime had proposed raising the FDI ceiling in its first budget in 2004-05. However, opposition from the Left parties forced the government to defer it to GoM in 2006 end.
Following opening of the insurance sector in 2000, about three dozen private companies have started operations in the country. Many of them are constrained by the 26 per cent FDI and have been making a case for raising the foreign investment cap.
