The government on Monday proposed to increase foreign direct investment (FDI) limit in the insurance sector to 74 per cent, in an attempt to attract the overseas players. The Insurance Act 1938 will be amended to “increase the permissible FDI limit from 49 per cent to 74 per cent in insurance companies and allow foreign ownership and control with safeguards,” the finance minister said in her Budget speech.
The FDI limit was fixed at 26 per cent when the insurance sector was privatised in 2000 and this was then raised to 49 per cent in the year 2015.
“The FDI limit hike in insurance will allow foreign ownership and control with safeguards. Under the new structure, the majority of directors on the boards and key management persons will be resident Indians with atleast 50 percent directors as independent directors. A specified percentage of profit will be retained as general reserve,” said the finance minister.