Laws governing insurance, stock mkts to be rewritten
NEW DELHI: The Cabinet on Thursday cleared rewriting of laws in two critical sectors - stock markets and insurance. The plan is to allow 100% foreign investment in insurance , 26 years after private players were allowed to reenter the important sector.
Finance minister Nirmala Sitharaman will pilot Securities Market Code Bill , which will replace three existing laws - the 70-year-old Securities Contracts (Regulations) Act, Sebi Act and Depositories Act. This is being done there are overlaps in several places. Earlier this year, govt also rewrote Income Tax Act to make it more concise and contemporary.
Sitharaman will also introduce Insurance Amendment Bill as 'Sabka Bima Sabki Raksha', to replace Insurance Act, 1938, LIC Act, 1957, and IRDA Act, 1999.
The amendments, which have been in the works for over a year, are primarily aimed at increasing insurance penetration and do away with redundant provisions. In coming years, there is expected to be a significant jump in the insurance sector, which is projected to grow annually at a compounded average rate of 7.1%, helping increase penetration from the current 3.7%.
Higher FDI limit - a contentious issue among politicians - is likely to result in more players entering the sector, giving more choice to those looking to buy insurance. Starting with 26% foreign investment, govt has gradually opened up the sector to overseas players, but that has not resulted in either a rush of capital out of the country, as was originally feared, or wipeout of domestic companies from the sector.
At the same time, several regulations on insurance companies and their executives, which are seen to be restrictive, are likely to be removed. Further, the idea is to open distribution network, allowing more competition in the space so that it is easier for consumers to buy insurance that extends beyond life covers to health, personal accident and property risk.
Finance minister Nirmala Sitharaman will pilot Securities Market Code Bill , which will replace three existing laws - the 70-year-old Securities Contracts (Regulations) Act, Sebi Act and Depositories Act. This is being done there are overlaps in several places. Earlier this year, govt also rewrote Income Tax Act to make it more concise and contemporary.
Sitharaman will also introduce Insurance Amendment Bill as 'Sabka Bima Sabki Raksha', to replace Insurance Act, 1938, LIC Act, 1957, and IRDA Act, 1999.
The amendments, which have been in the works for over a year, are primarily aimed at increasing insurance penetration and do away with redundant provisions. In coming years, there is expected to be a significant jump in the insurance sector, which is projected to grow annually at a compounded average rate of 7.1%, helping increase penetration from the current 3.7%.
Higher FDI limit - a contentious issue among politicians - is likely to result in more players entering the sector, giving more choice to those looking to buy insurance. Starting with 26% foreign investment, govt has gradually opened up the sector to overseas players, but that has not resulted in either a rush of capital out of the country, as was originally feared, or wipeout of domestic companies from the sector.
At the same time, several regulations on insurance companies and their executives, which are seen to be restrictive, are likely to be removed. Further, the idea is to open distribution network, allowing more competition in the space so that it is easier for consumers to buy insurance that extends beyond life covers to health, personal accident and property risk.
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