A. P. (DIR Series) Circular No.94
April 08, 2015
All Authorised Dealer Category-I Banks
Madam / Sir,
Foreign Direct Investment (FDI) in India – Review of FDI policy –Sector Specific conditions- Insurance sector
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to Annex B of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. In terms of Schedule 1 to the Notification ibid, 26% Foreign Direct Investment (FDI) is permitted under Automatic route in Insurance sector subject to conditions.
2. The extant FDI policy for Insurance sector has since been reviewed and further liberalized. Accordingly, with immediate effect, FDI in Insurance sector shall be permitted up to 49% subject to the revised conditions specified in the Press Note 3 (2015 Series) dated March 2, 2015. Also, a new activity viz. “Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)” has been included within the definition of ‘Insurance’.
3. Besides, the salient changes over the existing regime include:
4. A copy of Press Note 3 (2015 Series) dated March 2, 2015 issued in this regard by DIPP, Ministry of Commerce & Industry, Government of India is appended.
5. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Third Amendment) Regulations, 2015 notified vide Notification No. FEMA.340/2015-RB dated March 3, 2015, c.f. G.S.R. No. 183 (E) dated March 12, 2015
6. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
7. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
(B. P. Kanungo)
Principal Chief General Manager