BANKING AFFAIRS

Detailed explanation-1: -Parliament passes insurance amendment bill to raise FDI limit to 74% The FDI inflow in the insurance sector, the minister said, had increased significantly after the government decided to raise the cap from 26 per cent to 49 per cent in 2015.

Detailed explanation-2: -Previous amendment (2015) Indian insurance industry was liberalized in 2015 to increase FDI limit to 49% from 26%. However, after the initial days of this amendment, the Indian Insurance Companies Rules 2015 prescribed that FDI investment up to 26% under automatic route was allowed.

Detailed explanation-3: -The Union Budget 2021-22 announced the proposal to liberalise Foreign Direct Investment (“FDI”) in Indian insurance companies from the existing 49% to 74% with effect from August 2021.

Detailed explanation-4: -The regulator may allow 100% FDI in new lines of insurance business to expand the scope of the sector. At present, the upper limit for FDI is 74% into companies that write insurance cover.

Detailed explanation-5: -(f) (g) The foreign investment up to seventy-four percent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route subject to approval/verification by the Insurance Regulatory and Development Authority of India.