Raising FDI limit for insurers to 100% will generate employment opportunities: Union Minister of Finance Ms. Nirmala Sitharaman
- IBEF
- August 13, 2025
Union Minister of Finance Ms. Nirmala Sitharaman has informed Parliament that the proposal to increase the Foreign Direct Investment (FDI) limit in Indian insurance companies to 100% is expected to attract more players to the market and create new employment opportunities. She also stated that the enhanced FDI would lead to improved technologies and automation, resulting in quicker underwriting and claim processing. This, in turn, would reduce costs and increase the overall efficiency of the insurance sector by improving turnaround times. The announcement to raise the FDI limit from 74% to 100% was made during the Union Budget on February 1, 2025.
The insurance sector is governed by the Insurance Act, 1938, with oversight from the Insurance Regulatory and Development Authority of India (IRDAI) to ensure financial stability, policyholder protection, and transparency. The Act mandates that insurers invest a specific percentage of their funds in government and other approved securities. It also requires that all funds of Indian insurance companies be invested within India. It prohibits them from investing any of their funds abroad. Additionally, the Act stipulates that every insurer must consistently maintain an excess of assets over liabilities of at least 50% of the minimum capital amount to ensure financial stability. IRDAI further requires insurers to maintain a solvency control level of 150% at all times. In a separate matter, she also mentioned that the maximum continuous tenure for directors of cooperative banks (excluding the Chairperson and Whole-time Directors) has been extended from eight to ten years, effective from August 1, 2025.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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