Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2021
The Notification issued by Ministry of Finance for Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2021:
|Subject||Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2021|
|Effective date||They shall come into force on the date of their publication in the Official Gazette|
RBI has amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 to enable the increase in foreign direct investment limit in the insurance sector to 74 percent.
According to the Foreign Exchange Management (non-debt instruments) (second amendment) Rules, 2021, applications for FDI in private banks having joint ventures or subsidiaries in the insurance sector may be addressed to the Reserve Bank of India for consideration in consultation with the Insurance Regulatory and Development Authority of India to ensure that the limit of foreign investment of 74 percent for the insurance sector is not breached. It is also provided that in an Indian Insurance Company having foreign investment, a majority of its directors, a majority of its Key Management Persons and at least one among the Chairperson of its Board, its Managing Director, and it’s Chief Executive Officer, shall be Resident Indian Citizens.
The rules also require such insurance companies to have 50 percent of their directors as independent directors unless the chairperson of its board is herself or himself one. In that case at least one-third of its board should have independent directors.
It is further clarified that an Indian Insurance company having foreign investment shall comply with the provisions under the Indian Insurance Companies (Foreign Investment) Rules, 2015.