The government has proposed a 100% foreign direct investment (FDI) in the insurance intermediaries, i.e., broking farms from the present level of 49% in the Budget. Meanwhile, the government has also decided to separate the National Pension System (NPS) from pension regulator Pension Fund Regulatory and Development Authority (PFRDA) to resolve the issues over conflict of interest.
While declaring the FDI hike in the Budget, Finance Minister said that the government was also looking into possibilities of increasing the FDI limit in the insurance companies from the current level of 49%. On the other hand, insurance sources said the FDI cap is likely to be increased to 74% soon.
Sumit Rai, MD & CEO, Edelweiss Tokio Life Insurance, said, “The proposed 100% FDI in insurance intermediaries will have a positive impact on customers, intermediaries and the sector.” He added, “Insurance distribution is an upfront-capital intensive business with a long gestation period, and given low insurance penetration in India, there is a significant need to strengthen existent distribution networks. The proposed 100 per cent FDI, coupled with a strong India growth story, will enable intermediaries to expand faster in non-urban markets, deepening insurance penetration in the country.”
Adopting cautious approach, Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance, said, “When it comes to opening up of 100 per cent FDI in intermediation in insurance, we will have to wait and watch on how this develops further.”
