Finance Ministry amends FEMA norms to raise FDI limit in insurance prokerala.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from prokerala.com Daily Mail and Mail on Sunday newspapers.
The finance ministry has notified the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021 that require insurers with foreign ownership of over 49 per cent to maintain a solvency margin of 180 per cent if they declare dividend payments in a financial year. The government had sought public comments on draft rules issued on April 15, and has now notified the rules further to amend the Indian Insurance Companies (Foreign Investment) Rules, 2015. According to the rules notified, if insurance companies with foreign ownership above 51 per cent repatriate profits in the form of dividend to their shareholders, but cannot meet the 180 per cent margin requirement, they will have to set aside 50 per cent of their net profit in a general reserve.
Rules for insurance firms’ control tweaked after FDI ceiling raised to 74%
Updated:
Updated:
New norms seen as a ‘mixed bag’
Share Article
New norms seen as a ‘mixed bag’
Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members, as per the new rules notified under the Insurance Act. This follows the recent amendments to enhance the foreign direct investment (FDI) limit in the sector to 74% from 49%.
However, a majority of board members, key management persons (KMP) need to be resident Indian citizens, as should at least one of the three top positions the chairperson of the board, the MD and CEO.
Government notifies final rules for 74% foreign investment in insurance sector
May 20, 2021
×
Rules expected to benefit 23 private life insurers, 21 private non-life insurers and 7 specialised private health insurance companies
The Finance Ministry has notified final rules for foreign investment limit of 74 per cent in the insurance sector, which came into effect on May 19, 2021.
The new arrangement is expected to benefit 23 private life insurers, 21 private non-life insurers and 7 specialised private health insurance companies. Considering the capital required for pandemic induced expansion needs, finalisation of rules will be helpful for the insurance sector, officials feel.
One of the major proposals is the additional layer of solvency margin for higher limit of foreign investment. It prescribes 50 per cent of net profit in a financial year needs to be retained in the general reserve provided the solvency margin is lower than 1.2 times of the control level of solvency and