Insurance sector is looking for bonanza with foreign inflows of about $4 billion in near future.  This follows the passage of insurance bill in parliament that allows foreign investment in the insurance sector up to 49%, from 26%.

An indication of this foreign investment came on Thursday with the announcement of reduction stake by State Bank of India in the general insurance company from 76% to 51%. This would lead to the corresponding increase of stake of IAG (Insurance Australia Group) from 26% to 49%.

On Wednesday, the executive committee of the central board decided to initiate the necessary action as per JV agreement for dilution of SBI's stake.

The bank also holds 76% in its life insurance venture and may see the foreign partner increasing its stake in the life venture too. SBI Life Insurance is a joint venture between SBI and BNP Paribas Cardif.

SBI chairman Arundhati Bhattacharya had said last month that both domestic and international investors have shown interest in picking up stake and also hike it in the life and general insurance ventures.

After the Insurance Bill became a law, other insurance companies have started dilution move. The Bharti group has said that its foreign partner Axa will increase its stake to 49%.

In Max Bupa Health Insurance company, the international partner Bupa has also announced upping its stake to 49%.

Other private insurance major Reliance Capital had said that the company would soon initiate a dialogue with Nippon, its partners in life insurance, for increasing their stake.