Finance Minister Nirmala Sitharaman announced a proposal to amend the Insurance Act, 1938 to increase FDI limit from 49% to 74% in insurance companies during Union Budget 2021. This comes out as good news for all Insuretech Startups.
Announcing the decision she said, “We propose to amend the Insurance Act, 1938 and will launch a new investor charter for investor protection. A securities market code will be launched which will include the government Securities Act and the Depositories Act, SEBI Act.”
This amendment would further allow foreign ownership and control of insurance companies in the country with certain safeguards as more than 50% shall be beneficially owned by Indian citizens and major control of the insurance company will be in the hands of a resident Indian citizen.
The Finance Minister said that with appropriate support and investment by the private sector these above measures will have an increasing multiplier effect and take insurance to a large section of the Indian population”
FDI is an investment made by a company or an individual in one country into business interests located in another country.
