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The government will strengthen the insurance sector with these steps, these companies including LIC will benefit

Major management personnel and board members of most insurance companies should be resident Indians and the board should comprise at least half of the independent directors.

Fitch Ratings has stated that the country’s 2021-2022 budget proposals to simplify the foreign ownership cap on the listing of insurance companies and LIC will help the industry in attracting foreign capital, strengthening solvency and boosting competition. At the same time, the rating agency also said that these proposals can encourage global insurance companies to enter the rapidly expanding Indian market.




Whereas, domestic insurers may already try to increase their ownership in the short-term to international insurers. It is noteworthy that in the Union Budget, it has been proposed to increase the limit of foreign ownership on insurance companies from 49 percent to 74 percent. This will pave the way for foreign investors to become majority stake in insurance companies based in India.

These proposals will bring change

In addition, the Center also proposed new requirements to ensure adequate local participation. For example, most of the insurance companies’ key management personnel and board members should be resident Indians and the board should comprise at least half of the independent directors.

However, the government also plans to keep a specified percentage of the profits with the insurance company as a general reserve.




Foreign investment will also get a boost

So as to prevent excessive capital withdrawal by foreign parents. The agency said in a statement, “Fitch hopes foreign-owned regulations can be relaxed to attract international insurance companies and promote competition in the sector.” This will increase insurers’ access to capital and thus improve the solvency situation of the industry. ”

Insurance sector investment will improve

“We also believe that the infusion of new capital can be channelized to further develop insurers’ distribution networks, enable digitization, and bring expertise in areas such as marketing and client servicing that will go forward,” the statement said. Will further improve investment in the insurance sector. ” The government has used the budget to reiterate its commitment to list the country’s largest insurance company Life Insurance Corporation of India (LIC) through an IPO in the financial year ending March 2022.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ informalnewz@gmail.com
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