The Rajya Sabha today passed the Insurance (Amendment) Bill, 2021. The Bill seeks to amend the Insurance Act, 1938 which will increase the limit of foreign investment allowed in Indian insurance companies.
The Bill provides to increase the foreign direct investment limit from existing 49 percent to 74 percent.
It also has a provision for removal of restrictions on ownership and control of the insurance companies.
Replying to a discussion, Finance Minister, Nirmala Sitharaman said, that a higher FDI limit of 74 per cent is not a compulsion for every insurance company, as it sets only an upper limit.
She clarified that increasing the limit doesn’t mean automatic foreign investment to that level to all companies, and each and every company will decide the limit of investment.
She said the hike in foreign investment will help meet growing capital requirements of insurance companies as they are facing liquidity pressure.
She said, the move will help in deep penetration of insurance cover into the country and will also ensure insurance inclusion.
Responding to members’ questions with regard to reservation policy, the minister assured the House that Government is fully committed to social justice and existing reservation policy will continue in the insurance sector.
The Minister said the Bill has been brought after extensive consultation with IRDA and it has all necessary provisions to safeguard insurers’ interest.
While explaining the need for this legislation, she listed out various factors that would get benefitted in the insurance sector as a whole.
After the minister’s reply, Congress and other opposition parties staged a walkout from the House, opposing the Bill.
Earlier, when the House took up this Bill, opposition members including Congress created uproar against the legislation leading to multiple adjournments.
The opposition parties demanded that the Bill should be sent to the Standing Committee for further scrutiny.
Initiating the discussion on the Bill, Arun Singh of BJP said the Bill has nothing to do with the privatization of LIC per se.
He said, the insurance sector was opened for private players in 1991 which helped in providing insurance facilities on large scale.
He said, the legislation will provide affordable insurance facilities to the people.
Another MP of BJP Sushil Modi also highlighted the need for this legislation.
Participating in the discussion, Anand Sharma of Congress questioned the move saying that how India is going to become self reliant, if the government hands over the ownership of the country’s insurance companies to foreign players.
He opposed the Bill and wondered why the government is in a hurry to privatize the insurance sector on such a large scale.
Tiruchi Shiva of DMK said, it is understandable that the government needs funds but it should not come at the cost of general insurance companies and PSUs.
He said, with the passage of such legislation, insurance will not be affordable for the common people.
Vishambhar Prashad Nishad of Samajwadi Party demanded to send the Bill to the Select Committee.
Echoing the same view, Manoj Jha of RJD sought to know whether private players will protect the interest of existing employers and maintain the ongoing reservation policies.
Praful Patel of NCP also questioned the Bill. Banda Prasad of TRS, Anil Desai of Shiv Sena and others also participated in the discussion.
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