The insurance industry has welcomed the move to allow 100 percent foreign direct investment for insurance intermediaries saying the move will give the much-needed long-term capital for the sector and bring in a professional advisory to help customers.
Presenting the budget, finance minister Nirmala Sitharaman proposed 100 percent foreign direct investment in insurance intermediaries. Canara HSBC Oriental Life Insurance's Anuj Puri said more FDI can help bring in long term capital which is essential in the insurance business.
"The proposal to allow 100 percent FDI in insurance intermediaries will help the entry of large professional advisories which will go a long way in helping customers identifying and fulfilling insurance needs by getting in best-in-class services and global experience," Puri said.
Reliance Nippon Life's Ashish Vohra said FDI proposal will bring in cost-effective capital for several insurers who are investing in technology and digital solutions. "Our insurance penetration is still lower than other Asian countries, and more FDI will help in driving this positively," Vohra said.
ManipalCigna Health Insurance's Prasun Sikdar said the proposal will ensure higher penetration and will also facilitate further opening up of the economy. "The budget proposal on full FDI will attract global insurance distributors to set up their shops in the country without worrying about finding a suitable local partner and ownership and control issues," Liberty General Insurance's Amit Jain said.
To facilitate on-shoring of international insurance transactions and also to enable the opening of branches by foreign reinsurers at the International Financial Services Centre in Ahmedabad, the budget has proposed to lower the net owned fund requirement from Rs 5,000 crore to Rs 1,000 crore.
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