Shares of insurance companies surged up to 5 per cent on the BSE after Finance Minister Nirmala Sitharaman, in her Budget 2021 speech in the Parliament, announced hike in foreign direct investment (FDI) limit in the sector to attract more foreign funds. The FM proposed increasing the FDI limit in insurance to 74 per cent in the Budget 2021. Currently, the FDI limit is capped at 49 per cent. She also proposed to allow foreign ownership and control with certain conditions.
In her Budget announcement, the finance minister proposed an amendment to the Insurance Act for the same.
Reacting to the news, shares of ICICI Prudential Life Insurance Company rose 5.8 per cent, followed by General Insurance Corporation of India (up 5.41 per cent), The New India Assurance Company (up 5.16 per cent), HDFC Life Insurance Company (up 4.46 per cent), ICICI Lombard General Insurance Company (up 3.68 per cent), SBI Life Insurance Company (up 3.49 per cent), among other gainers.
Hiking the FDI limit in insurance companies was one of the key demands of various global investors after the government had amended the FDI policy to allow 100 per cent foreign investment in insurance intermediaries such as insurance agents, web aggregators of insurance policies and brokers in last year's budget.