The Cabinet has approved amendment to the Insurance Act paving the way for 74% FDI limit, CNBC-TV18 reported on Wednesday.
In her Union Budget for 2021-22, Finance Minister Nirmala Sitharaman had proposed increasing foreign direct investment (FDI) in Indian insurance companies from 49 per cent to 74 per cent. While the long-awaited move is expected to provide some insurers with new money, analysts agreed that individual policyholders would benefit as well.
LiveMint had previously reported that according to industry experts, the government’s latest move would make the sector more competitive, transparent and efficient.
rashant Tripathy, managing director and chief executive officer, Max Life Insurance told LiveMint that “as an industry that plays an important role in securing the nation, the proposed increase will provide companies with committed funds to improve the penetration of insurance in the country.”
“It will also bring in better technical know-how, innovation, and new products to the advantage of the consumers,” he said.
The FDI limit increase is also expected to provide some insurance firms with access to new funding, as they struggle to collect capital from their current promoters. This will not only improve some insurers’ solvency, but it would also provide long-term growth capital for other businesses to invest in newer technologies, reports had said.