IAG may increase its stake in State Bank of India (SBI) General Insurance if a bid to raise the country’s foreign direct investment (FDI) cap on insurance is successful.

The Australian group owns 26% of SBI General Insurance – currently the maximum investment allowed – but it has an option to increase this to 49% if the limit is lifted that far.

Last week Finance Minister Arun Jaitley unveiled plans to do just that.

IAG spokesman Paul Marriage says the group “has previously indicated it would like to increase its interest in SBI General but we need to see firstly that the measure gets through all stages of the Indian Parliament, and also we need to examine the details behind it”.

Mr Jaitley says the insurance sector is starved of investment and the cap needs lifting, while maintaining Indian management and control.

The Finance Ministry is reportedly reviewing four models for liberalising the sector, with a final proposal likely before the cabinet soon.

The Government is expected to push for a composite FDI limit of 49%, with foreign partners’ voting rights capped at 26%. It may also permit foreign institutional investments.

India’s insurance sector was opened up to private investors in 2000.

A proposal to raise the FDI cap first emerged in 2008, but it stalled under opposition from several political parties.

The SBI has 17,000 branches and more than 100 million customers.

In 2010 Chairman OP Bhatt said the bank wants to make the insurance joint venture one of the three largest domestic insurers by 2020.