- July 2, 2021
-- The Ministry of Finance in May, 2021 notified an amendment to the existing Indian Insurance Companies (Foreign Investment) Rules, 2015 which mainly raised the foreign direct investment (FDI) in the insurance sector from 49% to 74%. Along with the increase in the investment limit the notified rules included several directions with regard to the FDI. The amendment was expected as the same was announced in the Union Budget by the Finance Minister, Nirmala Sitharaman.
The insurance companies and the sector are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The principal law governing this sector is the Insurance Act 1938, according to which the foreign investment in Indian insurance companies was permitted up to 49% of the paid-up equity capital. On the other hand 100% foreign investment is allowed in insurance intermediaries with certain restrictions. The Insurance Act also lays down that the insurance companies in the country should be owned and controlled by Indians. The new rules have brought a change in the level of investment but retained that the control should remain with Indian citizens.
The new rules are applicable on all Indian insurance companies that have foreign investment irrespective of the percentage amount of the investment. The rules will have a retrospective effect as well and the insurance companies have been granted a one year time period to ensure compliance with the new rules. So what are the new rules introduced and how to ensure compliance?
Read full press release here: https://www.kpalegal.com/indian-insurance-companies-forei...