The government plans to increase the foreign direct investment in the insurance sector to 49% with a rider that the voting rights of the overseas partner will remain capped at 26%, according to a media report.
At present, the FDI limit in insurance companies is at 26%. The Insurance Laws (Amendment) Bill, 2008, proposes to increase in foreign holding in insurance joint ventures to 49% from 26% with corresponding voting rights, the report added.i
The proposal says that equity shares of the foreign company should not exceed 49% of the total paid-up equity capital of an insurance company, provided the voting rights of such foreign shareholders are not exceeding 26% in aggregate, the report further said.
The proposal also stipulates that the majority of company’s directors should be Indian nationals and foreign shareholders will have no say in the appointment of the CEO of the insurance company.
The proposal to hike the FDI cap in the sector was first mooted by the previous UPA government. This has been pending in the Rajya Sabha since 2008.
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