Banking News

FDI in insurance sector permitted up to 49% with immediate effect


The FDI policy for Insurance sector has since been reviewed and from immediate effect, FDI in Insurance sector shall be permitted up to 49% in place of earlier limit of 26%. The changes over existing rules are subject to the following revised conditions.

  1. Foreign investment in Indian insurance company shall be limited up to forty-nine percent of the paid up equity capital of which FDI up to 26 percent shall be under automatic route and beyond 26 percent and up to 49 percent shall be with Government approval.
  2. Foreign investment in the sector is subject to compliance of the provisions of the Insurance Act, 1938 and the condition that companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority of India for undertaking insurance activities.
  3. An Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities.
  4. Foreign portfolio investment in an Indian insurance company shall be governed by the provisions of Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations.
  5. Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank of India under the Foreign Exchange Management Act, 1999.

Terms ‘Control’, ‘Equity Share Capital’, ‘Foreign Direct Investment’ (FDI), ‘Foreign Investors’, ‘Foreign Portfolio Investment’, ‘Indian Insurance Company’, ‘Indian Company’, ‘Indian Control of an Indian Insurance Company’, ‘Indian Ownership’, ‘Non-resident Entity’, ‘Public Financial Institution’, ‘Resident Indian Citizen’, ‘Total Foreign Investment’ will have the same meaning as provided in RBI Notification No. G.S.R 115 (E), dated 19th February, 2015.

Also, a new activity viz. “Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)” has been included within the definition of ‘Insurance’.

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