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Insurance Amendment Bill 2021

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Insurance Amendment Bill, 2021:


The bill was recently passed by Rajya Sabha.

Key features of the Bill:

  • The Bill amends the Insurance Act, 1938 to increase the maximum foreign investment allowed in an Indian insurance company.
  • The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.
  • While control will go to foreign companies, the majority of directors and key management persons will be resident Indians who will be covered by law of the land.


Insurance companies are facing liquidity pressure and the higher limit would help meet the growing capital requirement.


Foreign investment in the insurance sector was first permitted in the year 2000 up to 26%.

  • Subsequently, vide an Amendment Act of 2015, this limit was raised to 49% of the paid-up equity capital of such company, which is Indian owned and controlled.


Prelims Link:

  1. FDI in insurance sector.
  2. Recent amendments.
  3. About IRDAI.

Mains Link:

Discuss the issues associated with allowing 100% FDI in the insurance sector.

Sources: PIB.