The Reserve Bank of India has notified 49 percent foreign direct investment (FDI) via an automatic route in the insurance industry.
“The extant FDI policy for the insurance sector has since been reviewed by the Government of India, and accordingly it has been decided to enhance the limit of foreign investment in insurance sector from 26 to 49 per cent under the automatic route subject to certain terms and conditions which have been notified on March 30,” RBI said in a notification on Thursday.
“No Indian Insurance company shall allow the aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, to exceed 49 per cent of the paid-up equity capital of such Indian insurance company,” it said.
The foreign equity investment cap of 49 per cent will relate on the same terms to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and Other Insurance Intermediaries appointed under the provisions of the Insurance Regulatory and Development Authority Act,1999.
Prior to this, only up to 26 percent FDI was allowed through the automatic approval route. For FDI up to 49 pe cent, the approval of the Foreign Investment Promotion Board was necessary. There are 52 insurance companies that are operating in India, of which 24 are into life insurance segment and 28 in general insurance.