New Delhi, July 24 : Insurance and banking stocks surged Thursday as the cabinet approved a proposal to increase foreign direct investment (FDI) limit in the insurance sector to 49 percent from the current 26 percent. The banking index at the Bombay Stock Exchange (BSE) rose by 74.64 points or 0.42 percent around 2.45 p.m.

The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 26,188.50 points, was trading at 26,256.69 points (at 2.45 p.m.), up 109.36 points or 0.42 percent from the previous day’s close at 26,147.33 points. Prominent financial companies which posted gains included Financial Tech, up 10.00 percent at Rs.365.75; Reliance Capital, up 3.86 percent at Rs.612.80; Bank of India, up 3.76 percent at Rs.298; Uco Bank, up 3.24 percent at Rs.105.30; and Bajaj Finance, up 2.37 percent at Rs.2,290.

Other gainers included Bank of Baroda, up 2.17 percent at Rs.872.50; Yes Bank, up 1.26 percent at Rs.543.40; Andhra Bank, up 1.11 percent at Rs.86.55; Union Bank, up 0.92 percent at Rs.198.10; HDFC Bank, up 0.83 percent at Rs.842.85; Punjab National Bank (PNB) up 0.77 percent at Rs.926.55; IDBI Bank, up 0.70 percent at Rs.93.00; and State Bank of India (SBI) 0.52 percent at Rs.2,553.50 The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi okayed the proposal for the hike but maintains Indian management control.

A senior government official who did not want to be named said the overseas investments in the insurance sector would be allowed through the Foreign Investment Promotion Board (FIPB) route.  In the budget for 2014-15 presented earlier this month, Finance Minister Arun Jaitley proposed to hike the overseas investment limit in the insurance sector to 49 percent.