FM Sitharaman: Higher FDI Cap in Insurance Sector to Boost Jobs

Swift Summary:

• The Indian government has proposed raising the FDI limit in Indian insurance companies from 74% too 100%, announced in the Union Budget on February 1, 2025.
• Finance Minister Nirmala Sitharaman stated in Parliament that this move could attract more players, generate employment, and improve efficiency through advanced technologies and automation.
• The Insurance Act, 1938 governs investment by insurers with strict provisions ensuring safety, liquidity of funds, and regulatory oversight by IRDAI.
• Key stipulations include mandatory investments within India, maintaining solvency levels of at least 150%, and hosting assets exceeding liabilities by not less than 50% of the minimum capital requirement.
• IRDAI is empowered to intervene in cases where insurers jeopardize policyholders’ interests.
• Insurance companies must comply with the Companies Act, India’s foreign investment rules (2015), and regulations governing operations like dividend payments and Board composition.
• Recent amendments to Section 10A of the Banking Regulation Act extended directors’ terms for cooperative banks from eight years to ten years as of August 1, 2025.

[Image Caption] Union Finance Minister Nirmala Sitharaman during a parliamentary discussion on raising FDI cap in insurance.
(Source: Sansad TV/ANI Video grab)

Indian Opinion Analysis:

The proposal to increase FDI limits for Indian insurance companies signals a drive towards greater liberalization and capital influx into India’s financial sector.If implemented effectively with adequate safeguards already present under regulatory frameworks such as HIPAA-like solvency tests aligned governedstructure’s sectors distal