The Rajya Sabha on Thursday passed the Insurance (Amendment) Bill 2021 giving hike in FDI limit to 74 percent with voice vote.
This Bill will allow the foreign investment cap in the Insurance sector from 49 percent to 74 percent.
Replying to the discussion, the Finance Minister Nirmala Sitharaman said that this hike will help meeting growing capital requirement of insurance companies. “Insurance is a highly regulated sector. The FDI limit is not a compulsory but only increasing the upper limit. The policy holder’s money that is collected will have to be invested here in India only”, she said.
The policy holder’s money that will be collected will have to be invested here in India only and this will lead to greater competition among the insurance companies will lead to better choices and better deal and better negotiated premium for customer, she said.
Replying to Congress Member Anand Sharma, Ms Sitharaman said that this Bill was brought after the insurance regulator IRDA which consulted 60 insurance companies, promoters, leading industry leaders and chambers.
Elaborating the insurance sector scenario in India, Ms Sitharaman said that this sector was broadly categories into two, general and life insurance firm. General insurance takes care of health and other issues and farm insurances. All together there are seven public sector insurance firms and 61 private sector firms which are working in India with the total employees and agents in public sectors has been over seven lakhs while the private sector has nearly 23 lakh, she added.
“The control and ownership has been allowed with safeguards. This bill is in alignment with the FDI policy of the country. The capital available in the country is only to supplement what is available in the country therefore we need to supplement this will increase the penetration of insurance in the country,” she further said.
Reiterating the Government’s stand on the fugitive economic offenders, she further said that Vijay Mallya, Mehul Choksi, Nirav Modi, all will be coming back to face the law of the land. We all know, whose friends were these people and who gave them the money.
“The word, control means, right to appoint majority of directors, control the policy decisions and shareholding pattern. By raising the FDI limit, control becomes a natural corollary. Key management personnel have to be Indian, which means all the law of the land, is applicable’’, she said.
She also said while replying the debate, that many Members flagged that there was a little demand for the FDI as the average FDI in private sector is 39 percent and under Section 27 (e) very clearly described that no insurer shall directly or indirectly invest outside of India the funds of Indian policy holders.
‘’ The reserves will have to be maintained by all firms to meet the policy insurance claims so that citizens claims are protected,” she added..
