Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

Press Note No. 1(2016 Series)

Dated: 23/03/2016

Subject: Review of Foreign Direct Investment Policy (FDI) on Insurance Sector.

The Government of India has liberalized its Foreign Direct Investment policy on Insurance Sector. Accordingly, Paragraph 6.2.18.7 of `Consolidated FDI Policy Circular 2015‘, effective from 12.5.2015, is amended to read as below:

S. No.Sector/Activity% of Equity/ FDI CapEntry route
6.2.18.7Insurance
6.2.18.7.1(i) Insurance Company

(ii) Insurance Brokers

(iii)Third Party Administrators

(iv) Surveyors and Loss Assessors

(v) Other Insurance Intermediaries appointed under  the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)

49%Automatic
6.2.18.7.2Other conditions
(a) No Indian insurance company shall allow the aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, to exceed forty-nine percent of the paid up equity capital of such Indian insurance company

(b) The Foreign Investment proposals up to forty-nine per cent of the total paid up equity of the Indian Insurance Company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India.

(c) Foreign investment in the sector is subject to compliance of the provisions of the Insurance Act, 1938 and the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority of India for undertaking insurance activities.

(d) An Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities referred to in Notification No. G.S.R  115 (E), dated 19th February, 2015.

(e) Foreign portfolio investment in an Indian insurance company shall be governed by the provisions contained in sub-regulations (2), (2A), (3) and (8) of Regulation 5 of FEMA Regulations, 2000 and provisions of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations.

(f) Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank of India under the FEMA.

(g) The foreign equity investment cap of 49 percent shall apply on the same terms as  above to Insurance Brokers, Third Party Administrators, Surveyors and Loss  Assessors and Other Insurance Intermediaries appointed under the provisions of the  Insurance Regulatory and Development Authority Act,1999 (41 of 1999):

(h) Provided that where an entity like a bank, whose primary business is outside the  insurance area, is allowed by the Insurance Regulatory and Development Authority  of India to function as an insurance intermediary, the foreign equity investment caps  applicable in that sector shall continue to apply, subject to the condition that the  revenues of such entities from their primary (i.e. non-insurance related) business  must remain above 50 percent of their total revenues in any financial year.

(i) The provisions of paragraphs 6.2.18.2.2(4) (i) (c) & (e), relating to `Banking-Private  Sector’, shall be applicable in respect of bank promoted insurance companies.

(j) Terms `Control’, `Equity Share Capital’, `Foreign Direct Investment’ (FDI), `Foreign Investors’, `Foreign Portfolio Investment’, `Indian Insurance Company’, `Indian Company’, `Indian Control of an Indian Insurance Company’, `Indian Ownership’, `Non-resident Entity’, `Public Financial Institution’, `Resident Indian Citizen’, `Total Foreign Investment’ will have the same meaning as provided in Notification No. G.S.R 115 (E), dated 19th February, 2015.

2.0   The above decision will take immediate effect.

(Atul Chaturvedi)

Joint Secretary to the Government of India

More Under RBI / FEMA

Posted Under

Category : RBI / FEMA (2709)
Tags : FDI circulars (45) fema (488)

Search Posts by Date

October 2016
MTWTFSS
« Sep  
 12
3456789
10111213141516
17181920212223
24252627282930
31