New rules notified under the Insurance Act
Part of: GS Prelims and GS-III – Economy
- As per the new rules notified under the Insurance Act, Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members.
- This follows the recent amendments to enhance the foreign direct investment (FDI) limit in the insurance sector from 49% to 74%
- However, a majority of board members, key management persons (KMP) need to be resident Indian citizens.
- Also, at least one of the three top positions — the chairperson of the board, the MD and CEO – need to be resident Indian citizens.
- This new norm will apply to all insurers, irrespective of the stake held by the foreign partner.
- Further conditions have also been specified on the composition of the board for firms where foreign investors’ stake exceeds 49%.