RS clears FDI limit to 74 per cent in insurance sector

The Rajya Sabha on Thursday passed the Insurance (Amendment) Bill, 2021. The Bill seeks to amend the Insurance Act, 1938 which will increase the limit of foreign investment allowed in Indian insurance companies.The Bill provides to increase the foreign direct investment limit from existing 49 percent to 74 percent.It also has a provision for removal of restrictions on ownership and control of the insurance companies.Replying to a discussion, Finance Minister, Nirmala Sitharaman said, that a higher FDI limit of 74 per cent is not a compulsion for every insurance company, as it sets only an upper limit. 
She clarified that increasing the limit doesn't mean automatic foreign investment to that level to all companies, and each and every company will decide the limit of investment.She said the hike in foreign investment will help meet growing capital requirements of insurance companies as they are facing liquidity pressure.She said, the move will help in deep penetration of insurance cover into the country and will also ensure insurance inclusion.

Responding to members' questions with regard to reservation policy, the minister assured the House that Government is fully committed to social justice and existing reservation policy will continue in the insurance sector.The Minister said the Bill has been brought after extensive consultation with IRDA and it has all necessary provisions to safeguard insurers’ interest.While explaining the need for this legislation, she listed out various factors that would get benefitted in the insurance sector as a whole. After the minister's reply, Congress and other opposition parties staged a walkout from the House, opposing the Bill.