|
The Indian Insurance
Companies (Foreign Investment) Rules, 2015 have been notified by the
Government of India under the powers conferred by Section 114 of the
Insurance Act, 1938 read with clause (b) of sub-section (7A) of Section 2 of
the Insurance Act, 1938 and Section 24 of the Insurance Regulatory and Development
Authority Act, 1999. These Rules have been prepared based on extensive
consultations with all the relevant Departments/Organisations. These Rules
incorporate the recent amendments in the law into the standing/prevalent
practices being followed hitherto with respect to the treatment of foreign
investment in Indian Insurance Companies under extant applicable regulations
and the FDI policy of Government of India.
According to these
rules, foreign equity investment cap of 49 per cent is applicable to all
Indian insurance companies and they shall not allow the aggregate holdings by
way of total foreign investment in their equity shares by Foreign Investors,
including portfolio investors, to exceed forty-nine per cent of their paid-up
equity capital and also shall ensure that ownership and control shall remain
at all times in the hands of resident Indian entities as referred to in these
rules. The foreign equity investment cap of 49 per cent shall also apply to
Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors
and other insurance intermediaries appointed under the provisions of the IRDA
Act, 1999.
As per these rules,
Foreign Direct Investment (FDI) proposals up to 26 per cent of the total
paid-up equity of the Indian Insurance Company shall be allowed on the
automatic route, and FDI proposals which take the total Foreign Investment
above 26 per cent and up to the cap of 49 per cent shall require FIPB
approval.
Further, Foreign
Portfolio Investment in an Indian Insurance Company shall be governed by the
provisions contained in the relevant sub-regulations/regulations under FEMA
Regulations, 2000 and provisions of the Securities Exchange Board of India
(Foreign Portfolio Investors) Regulations. 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.
These rules shall come
into force from the date of their publication in the Official Gazette.
A copy of these rules are also placed on the website of Department of
Financial Services at www.financialservices.gov.in
PIB
*********
|
