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Insurance Sector: The Union Cabinet on Friday approved the Insurance Laws (Amendment) Bill 2025, which limits foreign direct investment (FDI) in the insurance sector to 100 percent.
Insurance Sector: The Union Cabinet on Friday approved the Insurance Laws (Amendment) Bill 2025, which limits foreign direct investment (FDI) in the insurance sector to 100 percent. This bill can be introduced in the current winter session of Parliament. The winter session will end on December 19. This bill has been brought with the aim of increasing the reach of the insurance sector, accelerating development and ease of doing business. It has got a place among the 13 major bills included in the upcoming agenda of the Parliament. Finance Minister Nirmala Sitharaman, in this year’s budget speech, had proposed to increase the limit of foreign investment in the insurance sector from the current 74 percent to 100 percent as part of the new generation financial sector reforms.
LIC will get more rights
So far the insurance sector has raised Rs 82,000 crore through foreign direct investment (FDI). The Finance Ministry has proposed amendments to various provisions of the Insurance Act 1938, including increasing FDI in the insurance sector to 100 per cent, reducing paid-up capital and implementing a comprehensive license. The Finance Minister said that under a comprehensive legislative process, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999 as well as the Insurance Act 1938 will be amended. Under the amendment in the LIC Act, its board will be given the authority to take operational decisions like branch expansion and recruitment.
The interests of policyholders will be protected
The main objective of the proposed amendment is to promote the interests of policyholders, enhance their financial security and facilitate the entry of new players in the insurance market, which will accelerate economic growth and employment generation. Sita Raman said that such changes will be helpful in increasing the efficiency of the insurance industry, improving ease of doing business and increasing insurance coverage, thereby achieving the goal of insurance for all by 2047. The principal act providing the legislative framework for insurance in India is the Insurance Act of 1938. It regulates the relationships between insurers, policyholders, shareholders and the regulator, IRDAI, for the conduct of insurance businesses.
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