Govt unveils norms for 100% FDI in insurance intermediaries sector

However if a bank, whose primary business is outside the insurance area, is allowed by the IRDAI to function as an insurance intermediary, the foreign equity investment caps applicable in that sector, which is 74 percent, will continue to apply, subject to the condition that the revenues of such entities from the primary (non-insurance related) business must remain above 50 per cent. of their total revenues in any financial year.

 

 

New Delhi:

The government on Wednesday has notified the norms for allowing 100 per cent foreign direct investment (FDI) investment in the domestic insurance intermediaries sector including insurance brokers, third party administrators(TPAs) and Surveyors and loss adjusters and corporate agents.

 

The insurance intermediary that has majority shareholding of foreign investors has to  undertake the following:

(i) be incorporated as a limited company under the provisions of the Companies Act, 2013;

(ii) at least one from among the Chairman of the Board of Directors or the Chief  Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen;

(iii) has to take prior permission of the IRDAI for repatriating dividend;

(iv) has to  bring in the latest technological, managerial and other skills; (v) can't make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the Authority; (vi)  has to make disclosures in the formats to be specified by the Authority of all payments made to its group or promoter or subsidiary or interconnected or associate entities

 

The new rules specify that the foreign companies need to have resident Indian citizens as the majority of the directors on their board and can't make payments (other than dividend) to related parties taken as a whole, beyond 10 per cent  of the total expenses of the company in a financial year

 

However if a bank, whose primary business is outside the insurance area, is allowed by the IRDAI to function as an insurance intermediary, the foreign equity investment caps applicable in that sector, which is 74 percent, will continue to apply, subject to the condition that the revenues of such entities from the primary (non-insurance related) business must remain above 50 per cent. of their total revenues in any financial year.

 

The foreign direct investment proposals for an Indian insurance intermediary under new rule will be allowed under the automatic route subject to verification by the IRDAI, mentioned the rules. 

 
 


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