The union cabinet Wednesday approved two key ordinances: one to hike foreign equity cap in the insurance sector, and the other to hold auctions for cancelled coal blocks.

The government took the ordinance report as the two legislations could not be passed in the just-concluded session of parliament due to opposition protests over Vishwa Hindu Parishad's conversion drive.

Under the Insurance Bill, which has been pending since 2008 in the Rajya Sabha, foreign firms can increase their participation in insurance joint ventures from 26% to 49%.

The 49% cap would include both FDI and foreign portfolio investments and the move could possibly attract 
up to Rs. 50,000 crore from overseas investors, giving a major boost to the segment.

The total capital deployed in the private life insurance sector is close to Rs. 35,000 crore. With FDI at 26%, foreign equity is close to Rs. 8,700 crore

The cabinet meeting, presided over by Prime Minister Narendra Modi, gave its consent to the two ordinances to send a strong signal that the government will pursue reforms and won't allow disruptions in parliament to come in the way, a government official said.

The ordinance on coal is necessary for the government to hold auctions for the 214 blocks that were ordered cancelled by the Supreme Court in September.