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MoF by Notification dated 02.05.2026, notified the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026 (“Second Amendment 2026”)1 to further amend the Principal Rules 2019.
The salient features of the Second Amendment 2026 are as follows:
(i) 100% Foreign Direct Investment in Indian Insurance Companies: The Second Amendment 2026 has revised the limit for foreign direct investment in an Indian insurance company from 74% of total paid-up equity to 100% of total paid-up equity of the Indian insurance company is allowed under the automatic route, subject to approval and verification by Insurance Regulatory and Development Authority (“IRDAI”).
(ii) Requirements applicable to Indian Insurance Companies having foreign investment: Prior to the Second Amendment 2026, an Indian insurance company having foreign investment was required to have: (a) a majority of its directors; (b) a majority of its key management persons; and (c) at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer, as Resident Indian Citizens. Under the Second Amendment Rules, 2026, the requirement now provides that at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer, shall be Resident Indian Citizens.
(iii) Specific obligations applicable to insurance intermediaries having majority shareholding of foreign investors: The Second Amendment 2026 now restricts the specific compliance obligations applicable to insurance intermediaries with majority foreign shareholding, to the following: (i) incorporation as a limited company under the CA 2013; (ii) ensuring that at least one among the Chairman of the Board of Directors, CEO, Principal Officer, or MD is a resident Indian citizen; (iii) bringing in the latest technological, managerial, and other skills; and (iv) making disclosures, in such formats as may be specified by the Authority, of all payments made to group, promoter, subsidiary, interconnected, or associate entities.
The Second Amendment 2026 has come into effect from the date of its publication in the official gazette i.e., 02.05.2026.
Footnotes
1 Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2026.
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