Q. Consider the following statements regarding the Insurance (Amendment) Bill, 2021:
1. It increases the limit on foreign investment in an Indian insurance company from 24% to 49%.
2. It removes restrictions on ownership and control.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B
Notes:

The Insurance (Amendment) Bill, 2021 was introduced in Rajya Sabha by the Minister of Corporate Affairs, Ms. Nirmala Sitharaman, on March 15, 2021. The Bill amends the Insurance Act, 1938.

· The Act provides the framework for functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, its shareholders, and the regulator (the Insurance Regulatory and Development Authority of India).

· The Bill seeks to increase the maximum foreign investment allowed in an Indian insurance company.

· The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.

· The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.

· However, such foreign investment may be subject to additional conditions as prescribed by the central government.

Source: PRSINDIA

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