Question: On March 18 , 2021 Rajya Sabha passed the Insurance (Amendment) Bill, 2021 to amend the Insurance Act, 1938 . What is the new limit of FDI in Insurance sector which is set by this act?
a) 49%
b) 74%
c) 100%
d) 27%
Ans: b
Context
- The Rajya Sabha on 18th March 2021 has passed the Insurance (Amendment) Bill, 2021. The Bill seeks to amend the Insurance Act, 1938 which will increase the limit of foreign investment allowed in Indian insurance companies.
Facts
- The Bill proposes to increase the foreign direct investment limit from existing 49 percent to 74 percent in Insurance sector.
- It also has a provision for removal of restrictions on ownership and control of 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.
- Bill also specifies that at least half of directors have to be the independent directors which also ensure the accountability.
- FDI limit of 74 per cent is not a compulsion for every insurance company. It is only set as an upper limit.
- Hike in foreign investment will help meet growing capital requirements of insurance companies as they are facing liquidity pressure.
By kameshwar shukla
Reference: http://newsonair.com/Main-News-Details.aspx?id=412244