“The extant FDI policy for 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 percent under the automatic route subject to certain terms and conditions which have been notified on March 30,” RBI said in a notification.
“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 forty-nine percent of the paid up equity capital of such Indian Insurance company,” it said.
“The foreign investment up to 49 percent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route subject to approval or verification by the Insurance Regulatory and Development Authority of India,” it said.
The foreign equity investment cap of 49 per cent will apply on the same terms as above 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.
Earlier, only up to 26 per cent FDI was permitted through the automatic approval route. For FDI up to 49 per cent, the approval of the Foreign Investment Promotion Board was required.
There are 52 insurance companies operating in India, of which 24 are life insurance business and 28 in general insurance.