Passage of the Sabka Bima Sabki Raksha Bill: UPSC Current Affairs Story Arc
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ExploreFrom a cautious 26% in 2000 to a bold 100% today: India has finally unlocked the doors of its insurance sector to global capital, while simultaneously slashing capital requirements for foreign reinsurers by 80%—from ₹5,000 crore to just ₹1,000 crore.
Overview
The 'Sabka Bima Sabki Raksha' arc traces the final leap in India's decades-long insurance liberalization journey. By amending three bedrock legislations—the Insurance Act (1938), LIC Act (1956), and IRDAI Act (1999)—the government has enabled 100% Foreign Direct Investment (FDI) in insurance companies. This move aims to bridge India's massive 'protection gap' by attracting long-term patient capital and advanced global technology. Beyond just ownership, the arc highlights a significant shift in regulatory philosophy: the IRDAI has been granted enhanced 'search and secure' powers, making its directions legally binding, thus ensuring that total foreign ownership doesn't compromise consumer protection or national financial stability.
How This Story Evolved
Debate scheduled (Dec 16) → Lok Sabha passes Bill (Dec 17) → Cabinet approves Bill/Notification (Feb 04)
- 2025-12-16: India, Mexico in talks to mitigate tariff hike impact
More details
UPSC Angle: India, Mexico in talks to mitigate tariff hike impact.
Key Facts:
- India and Mexico: In talks to mitigate tariff hike impact
- India-U.S.: Very close to finalising initial framework deal
- Lawmakers: Set to debate 100% FDI in insurance proposal
- 2025-12-17: Lok Sabha Passes Bill to Raise FDI Limit to 100% in Insurance Sector
More details
UPSC Angle: Lok Sabha passes bill to raise FDI limit to 100% in insurance.
Key Facts:
- The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 seeks to amend the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999.
- The Bill raises the Foreign Direct Investment limit in insurance companies from 74% to 100%.
- The Bill reduces the Net Owned Funds requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore.
- FDI limit in Indian insurance companies increased to 100%
- Bill: subcoima subcore raia amendment of all insurance related laws bill in 2025
- Acts amended: Insurance Act 1938, LAC Act 1956, and IRDA Act 1999
- IRDA empowered to give binding directions to insurers
- Sabka Bima Sabki Raksha Bill, 2025: amendment Bill aimed at strengthening IRDAI's regulatory and enforcement powers
- Insurance Regulatory and Development Authority of India (IRDAI) gains search and seizure powers
- Insurance intermediaries covered: Agents, brokers, banks, NBFCs, fintech platforms, web aggregators, TPAs, surveyors, and insurance marketing firms
- Regulation of commissions to curb mis-selling and protect policyholder interests
- 2026-02-04: New Insurance Bill 2025: 100% FDI Approved
More details
UPSC Angle: New Insurance Bill 2025 allows 100% FDI in insurance companies.
Key Facts:
- Bill: Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025
- FDI limit: 100%
- Amends: Insurance Act, 1938, LIC Act, 1956, IRDAI Act, 1999
- NOF for foreign reinsurers reduced from ₹5,000 crore to ₹1,000 crore
Genesis
Trigger
The legislative process was formally triggered by the scheduling of a parliamentary debate on December 16, 2025, specifically focused on the 100% FDI proposal.
Why Now
India faces low insurance penetration (around 4% of GDP) and requires massive capital infusion to meet the goal of 'Insurance for All by 2047'. High capital requirements (₹5,000 Cr NOF) were acting as a barrier for foreign reinsurers to set up shops in India.
Historical Context
This follows the trajectory set by the Malhotra Committee (1993). FDI limits were gradually raised from 26% (2000) to 49% (2015) and 74% (2021). The 2025 Bill marks the final removal of the sectoral cap.
Key Turning Points
- [2025-12-17] Lok Sabha passes the Sabka Bima Sabki Raksha Bill
Cleared the primary legislative hurdle for 100% FDI, signaling political consensus on radical insurance reform.
Before: FDI capped at 74% with strict ownership controls. After: Path cleared for 100% foreign ownership and unified insurance laws.
- [2026-02-04] Union Cabinet Approval
Transitions the policy from a legislative proposal to an executive certainty.
Before: Bill awaiting final executive notification. After: Legal framework finalized for global capital entry.
Key Actors and Institutions
| Name | Role | Relevance |
|---|---|---|
| Union Cabinet | Executive Decision-Making Body | Gave the final seal of approval on Feb 04, 2026, allowing the bill's provisions to be notified and implemented. |
| Lok Sabha Lawmakers | Legislative Body | Debated and passed the amendment bill on Dec 17, 2025, providing the necessary democratic mandate for 100% FDI. |
| IRDAI | Sectoral Regulator | Granted extra-territorial powers of 'search and secure' and binding direction authority under the new Bill to manage the 100% FDI regime. |
Key Institutions
- Insurance Regulatory and Development Authority of India (IRDAI)
- Life Insurance Corporation (LIC)
- Department for Promotion of Industry and Internal Trade (DPIIT)
- Ministry of Finance
Key Concepts
Foreign Direct Investment (FDI) Cap
The maximum percentage of foreign ownership allowed in a specific domestic sector.
Current Fact: The Bill raised the FDI limit in Indian insurance companies from 74% to 100%.
Net Owned Funds (NOF)
The minimum capital a financial institution must hold to ensure solvency and ability to pay claims.
Current Fact: The requirement for foreign reinsurers was reduced from ₹5,000 crore to ₹1,000 crore.
Statutory Power of IRDAI
The legal authority of the regulator to enforce rules, conduct inspections, and issue binding orders.
Current Fact: The 2025 Bill gives IRDAI 'extra powers to search and secure' and makes its directions binding.
What Happens Next
Current Status
As of February 04, 2026, the Union Cabinet has officially approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, following its passage in the Lok Sabha on December 17, 2025.
Likely Next
Notification of updated FDI rules by DPIIT; IRDAI issuing new 'fit and proper' criteria for 100% foreign-owned entities; entry of specialized global niche insurers.
Wildcards
Pushback from domestic insurance unions (especially LIC-related); potential security concerns regarding data sovereignty with 100% foreign ownership.
Why UPSC Cares
Syllabus Topics
- Government policies and interventions for development
- Liberalization of the economy
- Investment models
- Insurance and Banking sectors
Essay Angles
- Financial Inclusion: From Sabka Saath to Sabka Bima
- The Role of Foreign Capital in India's Development Story
- Regulatory Sovereignty in a Globalized Economy
Prelims Likely: Yes
Mains Likely: Yes
Trend Signal: rising
Exam Intelligence
Previous Year Question Connections
- Increased sectoral cap of FDI to 100% for which sector? — Directly tests the central fact of this arc (100% FDI in Insurance).
- Who reviews independent regulators like IRDA? — The Bill increases IRDA's powers, making the oversight of such powers a critical GS-2 theme.
Prelims Angles
- The specific three Acts being amended: Insurance Act 1938, LIC Act 1956, and IRDAI Act 1999.
- The exact reduction in NOF for foreign reinsurers: ₹5,000 Cr to ₹1,000 Cr.
- The new 'search and secure' powers of the IRDAI.
Mains Preparation
Sample Question: Analyze the potential impact of 100% FDI in the insurance sector on India's financial stability and social security goals. How does the Sabka Bima Sabki Raksha Bill, 2025 balance liberalization with regulatory oversight?
Answer Structure: Intro: Context of the 2025 Bill and its 100% FDI provision. Body 1: Positive impacts (capital, technology, penetration, jobs). Body 2: Risks (data privacy, capital flight, domestic competition). Body 3: Regulatory Safeguards (IRDAI's enhanced binding powers and search/secure mandates). Conclusion: Strategic significance for 'Insurance for All by 2047'.
Essay Topic: Economic Liberalization 2.0: Completing the 1991 Agenda.
Textbook Connections
Indian Economy, Vivek Singh (7th ed.) > Chapter 7: Indian Economy after 2014 > 7.13 FDI in Insurance > p. 244
Provides the historical context of FDI limit increases (26% to 49% to 74%).
Gap: The textbook is outdated as it lists the cap at 74% (2021), whereas this arc completes the journey to 100%.
Indian Economy, Nitin Singhania (2nd ed.) > Chapter 14: Service Sector > M Insurance Reforms > p. 426
Explains the Malhotra Committee recommendations and the origin of IRDA.
Gap: Does not account for the new binding nature of IRDAI directions or the NOF reduction for reinsurers.
Quick Revision
- FDI in Insurance: Increased from 74% to 100%.
- Acts Amended: Insurance Act 1938, LIC Act 1956, IRDAI Act 1999.
- Reinsurance NOF: Slashed from ₹5,000 Cr to ₹1,000 Cr.
- IRDAI Powers: New 'search and secure' authority and binding directions.
- LS Passage Date: December 17, 2025.
- Cabinet Approval Date: February 04, 2026.
- Primary Goal: Closing the insurance protection gap and reaching 'Insurance for All by 2047'.
Key Takeaway
The Sabka Bima Sabki Raksha Bill (2025) completes India's insurance liberalization by allowing 100% foreign ownership while arming the IRDAI with enhanced statutory powers to maintain oversight in a high-stakes globalized market.
All Events in This Story (3 items)
- 2025-12-16 [International Relations] — India, Mexico in talks to mitigate tariff hike impact
India and Mexico are in talks to mitigate the impact of tariff hikes. India and U.S. are very close to finalising initial framework deal. Lawmakers set to debate 100% FDI in insurance proposal.More details
UPSC Angle: India, Mexico in talks to mitigate tariff hike impact.
Key Facts:
- India and Mexico: In talks to mitigate tariff hike impact
- India-U.S.: Very close to finalising initial framework deal
- Lawmakers: Set to debate 100% FDI in insurance proposal
- 2025-12-17 [Economy] — Lok Sabha Passes Bill to Raise FDI Limit to 100% in Insurance Sector
The Lok Sabha passed a bill to increase the FDI limit in Indian insurance companies from 74% to 100%. The bill, called subcoima subcore raia amendment of all insurance related laws bill in 2025, aims to reform India's insurance framework through changes in the Insurance Act 1938, LAC Act 1956, and IRDA Act 1999. IRDA has been given extra powers to search and secure, and directions from IRDA to underlying bodies now have a binding effect.More details
UPSC Angle: Lok Sabha passes bill to raise FDI limit to 100% in insurance.
Key Facts:
- The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025 seeks to amend the Insurance Act, 1938, the LIC Act, 1956, and the IRDAI Act, 1999.
- The Bill raises the Foreign Direct Investment limit in insurance companies from 74% to 100%.
- The Bill reduces the Net Owned Funds requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore.
- FDI limit in Indian insurance companies increased to 100%
- Bill: subcoima subcore raia amendment of all insurance related laws bill in 2025
- Acts amended: Insurance Act 1938, LAC Act 1956, and IRDA Act 1999
- IRDA empowered to give binding directions to insurers
- Sabka Bima Sabki Raksha Bill, 2025: amendment Bill aimed at strengthening IRDAI's regulatory and enforcement powers
- Insurance Regulatory and Development Authority of India (IRDAI) gains search and seizure powers
- Insurance intermediaries covered: Agents, brokers, banks, NBFCs, fintech platforms, web aggregators, TPAs, surveyors, and insurance marketing firms
- Regulation of commissions to curb mis-selling and protect policyholder interests
- 2026-02-04 [Economy] — New Insurance Bill 2025: 100% FDI Approved
The Union Cabinet has approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, allowing 100% foreign ownership in insurance companies. The bill amends the Insurance Act, 1938, LIC Act, 1956, and IRDAI Act, 1999, and aims to attract long-term foreign capital, enhance insurance penetration, promote technology transfer. The bill reduces Net Owned Funds (NOF) requirement for foreign reinsurers from ₹5,000 crore to ₹1,000 crore.More details
UPSC Angle: New Insurance Bill 2025 allows 100% FDI in insurance companies.
Key Facts:
- Bill: Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025
- FDI limit: 100%
- Amends: Insurance Act, 1938, LIC Act, 1956, IRDAI Act, 1999
- NOF for foreign reinsurers reduced from ₹5,000 crore to ₹1,000 crore
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