In what is seen as big reform push, the Union Cabinet has given the nod 74 percent FDI in the insurance sector.
Currently, the permissible FDI limit in the life and general insurance stands at 49 per cent with ownership and management control with Indian.
According to sources, the Cabinet in its meeting has approval for amendments in the Insurance Act, 1938.
Finance Minister Nirmala Sitharaman in Budget 2021-22 said, “I propose to amend the Insurance Act, 1938 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.”
Under the new structure, the majority of directors on the board and key management persons would be resident Indians, with at least 50 per cent of directors being independent directors, and 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.
It was in 2015 when the government hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent.