The government has notified the new rules and regulations under Indian Insurance Companies (Foreign Investment) (Amendment) Rules, 2021, for the Indian insurers which want to hike their foreign direct investment(FDI) to 74 per cent from 49 per cent.
Insurers having foreign investment, of 74 per cnt on or before the date of commencement of the Indian Insurance Companies (Foreign Investment) (Amendment) Rules, 2021 have to comply with new provisions within one year.
The total foreign investment in an Indian Insurance company will mean the sum total of direct and indirect foreign investment by foreign investors in such company.
According to the draft rules, in an Indian insurance company having foreign investment exceeding 49 per cent not less than fifty per cent. of the net profit for the financial year have to be retained in general reserve, if the insurer’s solvency margin is less than 1.2 times the control level of solvency for a financial year for which dividend is paid on equity shares.
Moreover,not less than fifty per cent. of directors of such insurers will be independent directors, unless the chairperson of its board is an independent director, in which case at least one-third of its board shall comprise of independent directors.
In an Indian insurance company having foreign investment a majority of its directors, a majority of its Key Management Persons, and at least one among the chairperson of its board, its managing director and its chief executive officer, has to be resident Indian citizens, said the draft rules.