FDI in Insurance

Why is it in news?
  • The new rules for Insurance promoter are notified under the Insurance Act.
  • Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members.
  • 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 need to be resident Indian citizens.
  • At least one of the three top positions- the chairperson of the board, the MD and CEO, should be Indian.
Applies to all JVs:
  • This new norm will apply to all insurers, irrespective of the stake held by the foreign partner, said legal experts.
  • In an Indian insurance company having foreign investment exceeding 49%, not less than 50% of its directors shall be independent directors.
Source: The Hindu.

Posted by Jawwad Kazi on 22nd May 2021