In March this year, Parliament passed a bill to increase the FDI limit in the insurance sector from 49 per cent to 74 per cent.
New Delhi. The government has said that applications for foreign direct investment (FDI) in an insurance company promoted by a private bank will be approved by the Reserve Bank (RBI) and the insurance sector regulator IRDA i.e. Insurance Regulatory and Development Authority of India (IRDAI). To ensure that the 74 per cent cap on foreign investment is not breached.
According to the notification issued by the Finance Ministry on August 19, 2021, these changes have been made by amending the Foreign Exchange Management (Non Debt Instrument) Rules, 2019. “These rules may be called the Foreign Exchange Management (Non Debt Instruments) Second Amendment Rules, 2021,” the notification said.
Parliament has passed the bill for 74 percent FDI in the insurance sector.
Earlier in March this year, Parliament passed a bill and increased the FDI limit in the insurance sector from 49 percent to 74 percent. The Insurance Act, 1938 was last amended in 2015, with which the FDI limit was raised to 49 per cent. Due to this, foreign capital inflow of 26 thousand crore rupees occurred in the country in the last five years.
According to the notification, “Applications for FDI in the insurance sector in joint venture or subsidiary private banks may be sent to the Reserve Bank of India for consideration, which will be considered in consultation with the Insurance Regulatory and Development Authority of India. This will ensure that the foreign investment limits applicable to the specified insurance sector in serial numbers F 8.1 and F 8.2 are not violated.”
