Ex-SBI chairman Khara to head panel to implement amendment to insurance law
Mumbai, Feb 19, 2025
Highly placed sources in the insurance sector clarified that the panel will not propose any further amendments and that its mandate is to work on the proposed amendments
The Insurance Regulatory and Development Authority of India (Irdai) has set up a seven-member committee headed by former State Bank of India chairman Dinesh Khara to look into the proposed amendments to the Insurance Act, 1938, and suggest a framework for implementation.
The finance ministry has proposed to amend various provisions of the Insurance Act, 1938, including raising foreign direct investment (FDI) in the insurance sector to 100 per cent, reducing paid-up capital, and introducing a provision for a composite licence, among others.
The other members of the panel are N Kannan, former chief executive officer (CEO), ICICI Prudential Life Insurance; Saurabh Sinha, former executive director (ED), Reserve Bank of India; Girish Radhakrishnan, former chairman and managing director (CMD), United India Insurance; Alok Mishra, managing director (MD) and CEO, Micro Finance Institutions Network (MFIN); Rakesh Joshi, former member of Irdai; and L Vishwanathan, a legal expert.
Highly placed sources in the insurance sector clarified that the panel will not propose any further amendments and that its mandate is to work on the proposed amendments.
“The Insurance Act, once it is amended, will have a lot of enabling provisions, for example, pertaining to 100 per cent FDI, penetration, and the entry of new players. The mandate of the committee is to set boundaries. The committee will see how those provisions can be enabled through regulations and circulars,” said a source.
“The regulator wants to be in a state of readiness before the Act is amended,” the sources added.
The Insurance Act, 1938, provides the broad legal framework within which the industry operates. It also led to the establishment of Irdai as the regulator for the industry. It details the various types of insurance policies across life, general, and health insurance that can be offered in India.
In the Union Budget, finance minister Nirmala Sitharaman announced the proposal to increase the foreign direct investment (FDI) limit in the Indian insurance sector from 74 per cent to 100 per cent. The minister also said the Centre is working on more reforms in the insurance sector.
Last week, M Nagaraju, secretary, Department of Financial Services (DFS), said internal consultations had been completed for the Insurance Amendment Bill, which will include details regarding investments and the repatriation of profits in the case of foreign direct investment (FDI). The composite licence in insurance is also part of the reforms.
“We have almost completed the internal governmental consultations. Then, we will take the next course of action. Along with this, there are also other rules on how the investments will be made and how the profits will be repatriated if there is FDI. That will also be part of the proposed amendment bill, which will be brought to Parliament," Nagaraju said.
“Once it is approved, those rules will also be notified so that all the reforms we intend to implement in the insurance sector to improve penetration will be carried out through these measures. The composite licence is also part of the reforms,” he added.
[The Business Standard]
