Finance Minister Nirmala Sitharaman on Monday introduced a Bill in Rajya Sabha that seek to amend the Insurance Act to pave the way for 74 percent foreign direct investment (FDI) in the sector. Earlier, on Wednesday, March 10, The Union Cabinet had gave its nod for amendments in the Insurance Amendment Bill 2021.

Finance Minister Sitharaman introduced the Bill for amendments in the Insurance Act, 1938. Currently, the permissible FDI limit in life and general insurance stands at 49 percent with ownership and management control with Indian.

Finance Minister presenting the Union Budget for 2021-22 had said, ''I propose to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49 percent to 74 percent in insurance companies and allow foreign ownership and control with safeguards.'' Under the new structure, the majority of directors on the board and key management persons would be resident Indians, with at least 50 percent of directors being independent directors, and a specified percentage of profits being retained as a general reserve.

She had also said that for investor protection, an investor charter would be introduced as a right of all financial investors across all financial products.

An increase in FDI will help improve life insurance penetration in the country. Life insurance premium as a percentage of GDP is 3.6 percent in the country, way below the global average of 7.13 percent, and in case of general insurance, it is even worse at 0.94 percent of GDP, as against the world average of 2.88 percent.

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