On Monday, the parliament approved a bill to increase foreign direct investment (FDI) in the insurance sector from 49% to 74%. Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman, who is piloting the Bill, stated that increasing the FDI limit in the insurance sector will support insurers in boosting additional funds and overcoming financial issues.
Last week, the Rajya Sabha passed the Insurance (Amendment) Bill, 2021. According to the minister, the government will finance the public sector insurance organisations, and private players would have to raise their own capital.
The minister also stated that the FDI limit was raised following the recommendations of the regulator IRDAI, which conducted extensive discussion with stakeholders. Following the government’s decision to raise the cap from 26% to 49% in 2015, FDI inflows into the insurance sector grown substantially.
She stated that FDI in the insurance sector has totaled Rs. 26,000 crore (US$ 3.59 billion) since 2015, and that the asset under management (AUM) in the sector has increased by 76% over the last five years.
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