Governing Change: India's Insurance FDI Reforms

A parliamentary panel recommends safeguard measures against risks like profit repatriation, as India raises its Foreign Direct Investment (FDI) limit in the insurance sector to 100 percent. The report highlights potential benefits from digital innovation, calls for active management of bank liquidity, and urges enhancement of tax systems.

The Parliamentary Standing Committee on Finance has called for safeguard measures to address concerns surrounding the increase of Foreign Direct Investment (FDI) to 100 percent in India's insurance sector. The measures aim to tackle issues such as profit repatriation and the diminished decision-making power of local firms.

The report underscores the integration of InsurTech as a vital tool for making insurance more accessible through digital innovations like AI and blockchain. The proposed FDI increase is anticipated to bolster competition, enhance insurance products, and improve customer services.

In banking, the panel noted the shift of deposits to the stock market, emphasizing the need for diversified funding and efficient operations. It highlighted concerns over dormant accounts in the PMJDY scheme and called for a prompt operationalization of the GST Appellate Tribunal to optimize tax systems.

(With inputs from agencies.)