The Insurance (Amendment) Bill, 2021, which sought to raise the Foreign Direct Investment (FDI) from 49% to 74%, has been passed in the Lok Sabha on Monday.
Finance Minister Nirmala Sitharaman moved the bill in the lower house of the parliament saying that expanding the FDI limit in the insurance sector to 74% will help insurers deal with issues concerning financial stress.
Sitharaman reiterated that there will be a “stressful situation” if growth capital is hard to come by. In an attempt to ensure that the situation is not left unattended, FDI must be raised, she said.
The COVID-19 pandemic has further affected the insurance companies, she added.
Notably, the minister said the inflow of FDI in the insurance sector had significantly increased after the government decided to raise the cap from 26 per cent to 49 per cent in 2015.
As much as Rs 26,000 crore has come as FDI in the insurance sector since 2015, she said, adding the asset under management (AUM) in this sector too have grown by 76 per cent during the last five years.