Lok Sabha Passes Bill to Increase Foreign Direct Investment in Insurance Sector to 100%
The Lok Sabha has passed a landmark Bill to raise the Foreign Direct Investment (FDI) limit in the insurance sector from 74% to 100%. This move aims to facilitate further capital infusion, introduce better technology, and improve insurance products. The Bill also empowers the insurance regulator, IRDAI, to disgorge wrongful gains from insurers and intermediaries. Additionally, it increases the maximum penalty on intermediaries from ₹1 crore to ₹10 crore to ensure legal compliance. The reform is expected to invite more global reinsurers to India and strengthen the public sector insurance companies.
Key Points
- FDI in the insurance sector has been increased from 74% to 100% to boost capital and technology.
- IRDAI is now empowered to disgorge wrongful gains and impose higher penalties for non-compliance.
- The maximum penalty on insurance intermediaries has been increased to ₹10 crore.
- The Bill amends the Insurance Act 1938, LIC Act 1956, and the IRDAI Act 1999.
Exam Facts
- FDI limit increase: 74% to 100%.
- Maximum penalty on intermediaries: ₹10 crore.
- Net owned fund requirement for foreign reinsurance branches reduced from ₹5,000 crore to ₹1,000 crore.
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