On February 21, 2020, the DPIIT issued Press Note 1 (2020 Series) (‘PN 1’), notifying the amendment to the Consolidated FDI Policy of 2017 for operationalizing the proposal for allowing 100% foreign equity investment in insurance intermediaries under the automatic route, subject to certain conditions including, verification by the IRDAI. Some of the key conditions are: (a) conditions in relation to ‘Indian ownership and control’ will not be applicable to insurance intermediaries, with the composition of the board of directors and key management persons being in accordance with specifications of concerned regulators; (b) for entities whose primary business is not the insurance sector, and are permitted to function as insurance intermediaries (like a bank), foreign investment caps applicable in its primary sector will continue to apply, subject to the revenue of such entity from the primary (non-insurance) business remaining above 50% of its total revenue in any financial year; (c) foreign portfolio investment will be governed by regulations issued by RBI and SEBI; (d) an intermediary having majority foreign shareholding will be required to undertake, inter alia, that: (i) it is incorporated as a limited company under Companies Act; (ii) at least one amongst the chairman of the Board, CEO, principal officer or managing director of the intermediary is required to be a resident Indian citizen; (iii) repatriation of dividend will require prior approval of IRDAI; and (iv) payments to a foreign group or promoter or subsidiary or interconnected or associate entities are not permitted beyond what is necessary or permitted by IRDAI.

These changes took effect from April 27, 2020 i.e. the date of the corresponding amendment to the NDI Rules.