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To woo foreign investors, insurance cover on bank deposits hiked to ₹5 lakh
With due safeguards in place, the Centre has also allowed foreign ownership and control in the insurance sector.
In an attempt to woo overseas players and foreign investment, the Centre on Monday decided to hike insurance cover on term deposits to ₹5 lakh up from the earlier ₹1 lakh for bank depositors. In the Budget 2021, Finance minister Nirmala Sitharaman also announced that the limit on foreign direct investment would be increased to 74% compared to the earlier 49%.
The move to increase insurance cover on term deposits will help investors in the event of a financial crisis or if the bank suffers sudden losses. The provision is likely to be fine-tuned further so that it also extends to banks freezing their deposits for some time in the event of a financial crisis or economic slowdown.
In the first paperless budget held amid the Covid-19 pandemic, Sitharaman also put forth a proposal to amend the Insurance Act of 1938 to accommodate the hike in permissible FDI limit for foreign investors to 74%, a significant increase from the earlier 49% in the insurance sector.
With due safeguards in place, the Centre has also allowed foreign ownership and control in the insurance sector. “Under the new structure, the majority of directors on the board and key management persons would be resident Indians with at least 50% of directors being independent directors and specified percentage of profits being retained as general reserve,” the finance minister said while presenting the Budget 2021-22.
This is the first time that the finance minister is reading the Union Budget speech in Parliament from a tablet instead of a conventional paper document from the Treasury Benches.
