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Insurance FDI Draft Rules Cut Compliance Burden for Foreign Investors

4 September 20251 min read
ECONOMYInsurance FDI DraftRules CutCompliance Burdenfor Foreign Investors4 September 2025safalsetu.com

Why in the news

The government released draft changes to insurer foreign investment rules to cut hurdles and attract global investors.

Key facts

  • Residency: majority-resident-Indian rule for directors and key management persons dropped; one of the Chairperson, MD or CEO must still be a resident Indian.
  • Wording: a fixed 74% reference becomes “the limit stipulated by the Insurance Act, 1938”, seen as a step to a 100% FDI cap announced in the Union Budget.
  • Dividends: earlier, insurers with solvency margin under 1.2x the control level had to retain them; now no regulator approval is needed to repatriate.

Above 49% foreign investment

  • Half the board must be independent, with tougher solvency safeguards; experts said this deterred investors.

Exam angle

  • FDI cap: 49% to 74% (2021); 100% proposed.
  • Statute: Insurance Act, 1938.

Test yourself

1. In 2021, the FDI cap in the Indian insurance sector was raised from 49% to what level?

The notes state the cap rose from 49% to 74% in 2021.

2. Under the draft insurance foreign investment rules, which post must still be held by a resident Indian?

At least one among Chairperson, Managing Director or CEO must remain a resident Indian.

3. The draft rules propose replacing the 74% wording with a limit stipulated by which Act?

The draft refers to the limit under the Insurance Act, 1938.

This topic is part of Daily Current Affairs 3 September 2025 (15 topics).

All topics of the dayDay quizSeptember 2025

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