Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Insurance Amendment Bill, 2021:
Context:
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.
Significance:
Insurance companies are facing liquidity pressure and the higher limit would help meet the growing capital requirement.
Background:
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.
InstaLinks:
Prelims Link:
- FDI in insurance sector.
- Recent amendments.
- About IRDAI.
Mains Link:
Discuss the issues associated with allowing 100% FDI in the insurance sector.
Sources: PIB.
