Parliament proceedings | Rajya Sabha passed Insurance Amendment Bill to increase FDI limit by 74%

The Rajya Sabha on Wednesday passed the Insurance Amendment Bill 2021, which allowed the maximum foreign investment in an insurance company to be increased from 49% to 74% amid criticism from opposition parties over a clause enabling “control and ownership” by foreign investors. is.

Opposition parties, unsuccessfully trying to block the House, demanded that the Bill not be taken up in a hurry and instead sent to a standing committee. He marched into the well of the House after Finance Minister Nirmala Sitharaman moved the bill. The house was adjourned four times between 2:30 and 3:30 pm as the deadlock continued.

The debate began at 3:30 in the afternoon, when the opposition reluctantly argued for the government’s protest instead of continuing with the protests.

Senior Congress leader Anand Sharma opened the debate questioning the justification and intent of such a bill. He said that when the government has a majority in both the houses, the opposition demands why the parliamentary inquiry is in a hurry to pass the bill. He said that insurance companies keep people’s money in trust and this bill breaks it. He also accused the government of violating assurances given in 2015 that “Indian ownership and control” would remain. He said that the bill has been brought in with readiness to divert attention from the high fiscal deficit and is in line with the government’s recent measures to privatize national assets.

Mr. Sharma said, “We are not opposed to the policy of disinvestment, but whether it is disinvestment or a leap towards privatization and the grand clearance of national assets built over the years is on sale.”

He also said that large insurance companies are not in lack of capital and the bill is different from the government’s motto – “Atmanabir Bharat”.

DMK MP Tiruchi Siva stated that none of the insurance companies have managed to get FDI even to the current limit of 49% and questioned the justification for raising this limit.

Responding to the debate, Finance Minister Nirmala Sitharaman assured the House that the policy holder’s money would not leave Indian shores and would have to be compulsorily invested here. He argued that more FDI would mean greater competition and thus better negotiation premiums for the end user.

Many members had given the green signal that the control of foreign companies would also mean that the reservation policy would be underestimated. Answering this question, Ms. Sitharaman stated that the public sector insurance companies employ only more than seven lakh persons whereas the private sector has more than 23 lakh employees and agents.

He said that the reservation policy will continue in the public sector companies. It also said that the sector was opened by allowing 26% FDI in 2000, increasing the number of companies, insurance penetration and jobs. In 2015, the Narendra Modi government brought another amendment to raise the FDI limit to 49%. “Since 2015, in the last five years, foreign investment of ₹ 26,000 crore has come and 12 new insurance firms have opened,” she said.

Samajwadi Party MP Vishwambhar Nishad asked the government how it would deal with foreign regulations if it was declared bankrupt, if it was declared bankrupt, the savings of millions of Indians would be drowned. “All companies have to maintain reserves to meet policy insurance claims. Therefore the claims of the citizens will be protected. He pointed to Section 27 (e) of the Insurance Amendment Bill, which states that “no insurer shall directly or indirectly invest in the funds of Indian policy holders outside India.”

Facing significant criticism over opposition parties handing over “control and ownership” to foreign companies, Ms Sitharaman said it comes with security measures. The key management personnel would have to be Indian and would therefore be governed by Indian laws.

At this point many members marked the cases of Vijay Mallya, Mehul Choksi and Nirav Modi, who had survived default on huge debts. “Let me tell you, Vijay Mallya, Mehul Choksi and Nirav Modi are all coming back here to face the law of the land,” Ms Sitharaman said.

There was no clear reply from the minister on the request to bring this bill, as several members stated that most of the companies had not met the existing limit of 49%. “Members asked, is there not enough money in this country? There are enough borrowers as well. Not enough,” he said.

The Insurance Regulatory and Development Authority had talked to 60 firms and other private players.