Rajya Sabha passes Insurance Amendment Bill

• The Rajya Sabha has passed the “Insurance Amendment Bill 2021”.
• The Bill will amend the Insurance Act, 1938.
• The bill was passed even after the Opposition parties was criticising the bill for its clause that enable “control and ownership” by the foreign investors.
• The bill will increase the limit of foreign direct investment (FDI) from 49 percent to 74 percent in Indian insurance companies.
• The bill also comprises of the provision for removal of restrictions on ownership & control on the insurance companies.
• As per the bill, majority of directors on the board and key management persons will have to be resident Indians.
• Thus, this provision will make them accountable to the Indian law.
• Further, the bill specifies that at least half of directors have to be the independent directors which also ensures the accountability.
• Finance Minister Nirmala Sitharaman has proposed during her presentation of the Union Budget 2020-21 to liberalize the foreign direct investment (FDI) in Indian insurance companies to 74%
• This move will provide access to fresh capital to some of the insurers.
• The experts also believe that the decision will also benefit the individual policyholders.
• Increase in the FDI limit will also attract the foreign capital where it is required.