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ARTICLE · 14 JANUARY 2020

Budget 2019-20 Analysis & Expectations – Insurance Sector

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Some of the key announcements Finance Minister Nirmala Sitharaman made in the Union Budget on July 5, 2019 on insurance.

IndiaInsurance
Hemant Sahai
Hemant Sahai
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Some of the key announcements Finance Minister Nirmala Sitharaman made in the Union Budget on July 5, 2019 on insurance are:

  • that in order to facilitate onshoring of international insurance transactions and to enable opening of branches by foreign reinsurers in the international financial services centre (IFSC) specifically, it is proposed to reduce the net owned fund requirement of such companies from INR 5000 crore to INR 1000 crore. 
  • that 100% foreign direct investment (FDI) will be permitted for the insurance intermediaries (explained below) in India.

General Analysis

  • The Finance (No.2) Bill 2019 (Finance Bill), has proposed to amend the Insurance Act, 1938 (Insurance Act) to include a new sub-clause (3) to Section 6 (Requirement as to Capital) of the Insurance Act, restricting any foreign company established under an international financial service center from engaging in re-insurance business in India.

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