The department of industrial policy and promotion (DIPP), a part of the commerce ministry, has clarified that the holdings of portfolio investors, such as foreign institutional investors (FIIs) and non-resident Indians (NRIs) will be included in the 26% foreign investment cap for insurance companies.
This move, which is likely to make it easier for insurance ventures to list on the stock exchanges and also for existing investors to exit, is not something new as Foreign investments, which include FII and NRI investments, were already allowed in insurance and related fields like insurance brokers, third-party administrators as per the Insurance Act. It was just the need of clarity which has driven this initiative.
As per the release, the four sectors where insurance related FDI would be allowed, while keeping the cap at 26% through the automatic route, include, insurance companies, insurance brokers, third-party administrators and surveyors and loss assessors.
Thus far, Insurance act on FDI limit stated that quantum of paid-up equity share capital held by other foreign investors, non-resident Indians, overseas corporate bodies and multinational agencies in the applicant company. However, FDI policy has now been aligned with Act and clarifies that 26% cap is a composite one, which includes all type of foreign investments.
However, DIPP underscored that companies bringing in FDI would obtain the necessary licence from the Insurance Regulatory and Development Authority (IRDA) for undertaking insurance activities.
This move, which is likely to make it easier for insurance ventures to list on the stock exchanges and also for existing investors to exit, is not something new as Foreign investments, which include FII and NRI investments, were already allowed in insurance and related fields like insurance brokers, third-party administrators as per the Insurance Act. It was just the need of clarity which has driven this initiative.
As per the release, the four sectors where insurance related FDI would be allowed, while keeping the cap at 26% through the automatic route, include, insurance companies, insurance brokers, third-party administrators and surveyors and loss assessors.
Thus far, Insurance act on FDI limit stated that quantum of paid-up equity share capital held by other foreign investors, non-resident Indians, overseas corporate bodies and multinational agencies in the applicant company. However, FDI policy has now been aligned with Act and clarifies that 26% cap is a composite one, which includes all type of foreign investments.
However, DIPP underscored that companies bringing in FDI would obtain the necessary licence from the Insurance Regulatory and Development Authority (IRDA) for undertaking insurance activities.
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