Economy

Govt plans to amend LIC Act to provide greater autonomy, says DFS Secretary Nagaraju

The Centre plans to bring amendments to the LIC Act to give more functional autonomy to state-owned insurance behemoth, Financial Services Secretary M Nagaraju said on Monday.

This will be part of the Insurance Laws (amendment) Bill that the Centre is readying to be introduced in the ongoing budget session, Nagaraju said.

“The Bill has been approved by the Finance Minister. It will soon be taken to the Cabinet for approval. Most likely it will get introduced in Budget session itself. We are very keen that FDI hike in insurance sector to 100 percent is implemented at the earliest”, he said.

On insurance rules

Nagaraju also said that insurance rules will also be reviewed and amended to be released along with enactment of the law. The rules will remove earlier requirements that were seen to be restrictive from the perspective of foreign players. It would review norms around FDI, repatriation of dividends, appointment of key management persons. “Everything will be done together so that there is no ambiguity. We want to provide clarity on roadmap,” he said.

Indications are that government and IRDAI will remove restrictions such as majority of board should comprise of Indian nationals etc. DFS Secretary highlighted that total FDI inflow into insurance sector since it opened up in 2000 has been ₹82,000 crore, which is very low given the size of the country. “Because of regulatory restrictions, not much FDI has flown. We need to have 100 per cent FDI so that they can bring their people, products and technology,” he added.

Nagaraju said there is already tremendous interest from foreign insurers to have wholly-owned entities in insurance sector in India. Also, he noted that none of those interested players have objected or expressed concern on the rider that all premiums collected by the 100 per cent owned entities should be invested only in India.

On the proposed amendment to LIC Act, Nagaraju said the idea is to ensure that LIC is given more autonomy on issues like Staff hiring, compensation and opening of new branches or offices. “We don’t want LIC to come to government for approval on certain issues. We want to give them more functional autonomy,” he said.

The proposed Insurance Laws (amendment) Bill will also seek to amend the Insurance Act and IRDAI Act, Nagaraju added.

He noted that amendments to Insurance Act will cover reforms such as increase in foreign direct investment limit in insurance sector from 74 per cent to 100 percent; introduction of composite licences in insurance sector and other significant reforms.



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