Draft bill seeking 100 pc FDI in insurance to be sent for Cabinet nod soon: DFS Secretary

New Delhi: The finance ministry will soon send the draft bill seeking to increase the FDI limit in the insurance sector to 100 per cent to the Union Cabinet for its approval, Financial Services Secretary M Nagaraju said on Monday.

"Finance Minister has already given her approval and announced it in the Budget. Now we will prepare a draft bill with the help of the law ministry," he said in an interaction with media here.

Thereafter, the draft bill will be sent to the Cabinet for approval.

The intent of the Department of Financial Services (DFS) is to get the bill introduced during the current Budget session, he said.

Finance Minister Nirmala Sitharaman in her Budget speech proposed to raise the foreign investment limit to 100 per cent from existing 74 per cent in the insurance sector as part of new-generation financial sector reforms.

"This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified," she had said.

So far, the insurance sector has attracted Rs 82,000 crore through FDI.

To enhance the FDI limit, the government will have to bring amendments to the Insurance Act 1938, the Life Insurance Corporation Act 1956, and the Insurance Regulatory and Development Authority Act 1999.

The bill will also simplify certain procedure and rules.

The Insurance Act 1938 serves as the principal Act to provide the legislative framework for insurance in India.

It provides the framework for the functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, shareholders and the regulator -- Insurance Regulatory and Development Authority of India (Irdai).

The entry of more players in the sector would not only push penetration but also result in greater job creation across the country.

Currently, there are 25 life insurance companies and 34 non-life or general insurance firms in India. These include companies like Agriculture Insurance Company of India Ltd and ECGC Ltd.

The FDI limit in the insurance sector was last raised -- from 49 per cent to 74 per cent -- in 2021.

In 2015, the government had hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent.