American International Group's recent financial crisis could have significant repercussions on its businesses in India.
However, sources in Tata AIG told Business Standard on Thursday the money was safe and there was no cause for concern.
According to foreign media reports, the largest US insurer by assets, AIG was working on plans to raise capital and sell units to forestall credit downgrades.
A report in The New York Times said that AIG had asked the Federal Reserve for a $40-billion bridge loan after rejecting an offer from JC Flowers & Co to acquire the whole company.
AIG has several businesses in India. These include joint ventures in life and non-life insurance with the Tata Group, an NBFC called Vivek Hire and Purchase, in which it has 75 per cent controlling stake, a BPO, a private equity arm and an asset management company named AIG Global AMC.
Though the financials of AIG's Indian operations were satisfactory, yet there had been a deliberate slowdown in its expansion plans, said another official of AIG India on the condition of anonymity.
"Our operations across the verticals in the country will be impacted to a certain extent, particularly with regard to our expansion plans," the official said. However, he refused to divulge further details, saying that they were waiting for instructions from their New York-based counterparts.
Since the Indian insurance business was highly capital intensive due to high solvency requirements stipulated by law, AIG may find it difficult to pull on in Tata-AIG Life Insurance and Tata-AIG General Insurance, said experts.
"Life insurance requires continuous flow of capital. AIG's capital commitments for India will take a hit and will subsequently impact their growth plans," said Suresh Ganapathy, analyst, Deutsche Equities. Insurance apart, AIG's subsidiary United Guarantee Corporation has entered into a joint venture with National Housing Bank, International Finance Corporation and Asian Development Bank to set up a mortgage guarantee company, and even applied to the Reserve Bank of India for the same.
An NHB official, however, said that now they will have to wait and watch how the AIG crisis impacts the mortgage guarantee company plan.