Mumbai: The Centre on Saturday has notified 100 per cent foreign direct investment (FDI) in insurance companies under the automatic route, subject to regulatory safeguards.
The amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 provide that foreign investment will be governed by provisions of the Insurance Act, 1938 and require approvals from the Insurance Regulatory and Development Authority of India (IRDAI) for insurance and related activities.
The liberalised policy also covers insurance intermediaries, including brokers, reinsurance brokers, consultants, third-party administrators, corporate agents, surveyors, loss assessors and insurance repositories.
However, foreign investment in the Life Insurance Corporation of India will continue to be capped at 20 per cent under the automatic route.
Nilesh Sathe, former member of IRDAI, said, “Foreign players are now getting a red carpet welcome in India. FDI can now freely flow in India’s insurance sector without waiting for bureaucratic delays for approvals. Foreign players who are presently partnering with Indian conglomerates and banks, will get a chance to increase their stake seamlessly while Indian partners who want to unlock their value will be able to do so easily.
“Market is likely to expand and new products may be launched. It will be interesting to see which foreign companies get attracted to the highly competitive and capital intensive insurance sector and also which Indian conglomerates unlock their capital,” he added.
The notification said foreign investment in LIC will be subject to provisions of the Life Insurance Corporation Act, 1956 along with applicable provisions of the Insurance Act.
It also mandates that at least one among the chairperson, managing director or chief executive officer of an insurance company with foreign investment must be an Indian resident citizen.
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