Govt to further relax rules for FDI in insurance sector

Condition mandating presence of Indian residents on boards and top posts to be removed

- Subhash Narayan

The government plans to further liberalize foreign investment rules for insurance companies by removing the condition that mandates the presence of Indian residents on the boards and top management of insurance entities, said finance ministry officials.

The insurance reforms bill will be introduced in the ongoing budget session of Parliament, one of these officials said.

In her budget speech on Saturday, finance minister Nirmala Sitharaman announced the government would allow foreign entities to fully own insurance companies in India by increasing the foreign direct investment (FDI) limit from 74% to 100%.

She added, "The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified."

The relaxed foreign investment rules, however, won't affect the provision that offers a higher FDI limit only to companies that invest their entire premium earnings in India.