This provision was in force of August 1, 2025, she added Photocredit: Ani
The proposed increase of the BDI limit at Indian insurance companies to 100 percent would bring more players to the market and generate employment opportunities, Minister of Finance Nirmala Sitharaman informed the parliament on Tuesday.
She also said: “Improved technologies and automation would lead to faster insurance, claim processing that leads to improved lead time, reducing the costs and the overall efficiency of the sector is improved.” The increase in BDI at Indian insurance companies of 74 percent to 100 percent was announced in the Budget of the Union on February 1, 2025.
The Insurance Act, 1938, regulates investments by insurers with a strong emphasis on safety, liquidity and legal supervision by aligning investments by insurers to the interests of the policyholders.
The law determines time, way, form, conditions and instruments permitted for investments. Insurers have the task of investing a certain percentage of funds in government effects and other approved effects, as specified by Insurance Regulatory and Development Authority of India (IRDAI).
“Moreover, the law does not allow Indian insurance companies to invest their funds outside of India. That is why all funds of insurance companies must be invested in India,” she said in an answer in the Rajya Sabha.
In order to guarantee the financial stability in the insurance sector and the protection of policyholders, she said, the law further obliged every insurer to maintain at all times, an excess of assets of no less than 50 percent of the minimum capital amount.
Irdai also obliges insurers to maintain the controlling level of solvency of 150 percent at all times, she said.
Furthermore, in the case of an insurer that in a way that presents itself for the interests of the policyholders, IRDAI is authorized by the Act to replace the council of such an insurance company and to appoint a manager to manage the goods of the insurance company.
Moreover, she said, the regulatory supervision of the IRDAI ensures transparency and protection of policyholders by promoting solvency, monitoring of solvency, supervision and efficient complaints representative.
According to the Companies ACT, 2013, all insurance companies are administrative entities and they must always comply with the Companies ACT, 2013 for all administrative matters.
This, in addition to Indian insurance companies (foreign investments), 2015 regulates various aspects of activities, including dividend payment, repatriation of profit and composition of the board of directors for insurance companies.
“All these provisions and mechanisms ensure sufficient checks and balances for the behavior of insurance in India and act as guarantees,” she said.
In response to another question, Sitharaman said that the maximum continuous term of office of directors of cooperative banks (excluding chairman and full -time drivers) has been extended from 8 to 10 years after the recent change in section 10A (sub section 2a (i)) of the Banking Regulation Act 1949 (BR ACT). This provision is in force of 1 August 2025, she added.
Published on August 12, 2025
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