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The Insurance (Amendment) Bill was introduced in the upper house of parliament on the 15th of March 2021and the same being approved by both the houses of Parliament. With this amendment Govt. would like to allow additional FDI to Insurance segment. With this amendment only Sectoral limit of FDI enhanced from 49% to 74%, however other terms and conditions enumerated under FDI policy will remain same.

Foreign Investment : The original Act allowed for foreign investors to hold up to 49% of the capital in an Indian insurance firm, meaning that the firm had to be in the control of an Indian entity. The amendment increases this limit to 74%. The foreign investment will nonetheless be subject to certain conditions laid out by the government.

Changes to the Investment of Assets : The Act of 1938 specified that insurers must hold a minimum investment in their assets so that will be able to clear their insurance claim liabilities. If the insurer was incorporated or domiciled outside of India, then the assets must be held in a trust inside India with vested trustees who are residents of India. This also applied to insurers incorporated in India in the cases of - a) 33% capital is owned by investors domiciled outside India, or b) 33% of the members of the governing body are domiciled outside India. The new bill removes the requirements of 33% of holding for insurers incorporated in India.

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