Three of India’s top financial regulators outlined their priorities on the second day of the Business Standard BFSI Insight Summit 2025, setting the tone for discussions on the future of the country’s financial sector.
The day began with a fireside chat with Ajay Seth, Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), who assured the industry that the regulator would operate with transparency and openness.
“As a regulator, I approach issues with an open mind. My decisions are based on data, analysis, and the perspectives I hear — but nothing is done without extensive consultation and consensus-building,” said Seth.
His remarks came at a time when the insurance sector is facing slow growth in both new policies and premium collections. Seth noted that while the health insurance segment is in a “state of unstable equilibrium,” the life insurance industry is struggling with inefficiencies and growing competition from other sectors managing India’s savings.
On capital requirements, Seth clarified that raising the FDI limit to 100% alone would not solve the sector’s capital needs.
“The total capital of the insurance industry — life and non-life — stands at about ₹3.5 trillion, of which foreign investment accounts for only ₹80,000–90,000 crore,” he said.
In a separate session, Pension Fund Regulatory and Development Authority (PFRDA) Chairperson S. Ramann said that the proposed move to allow 100% FDI in insurance could also open the door for global pension fund managers to enter India without joint venture partners, since insurance and pension FDI rules are closely linked. At present, the pension sector allows up to 74% foreign investment.
Ramann also highlighted the need to expand pension coverage in India, revealing that the PFRDA is exploring the idea of “small pension fund houses”, similar to small finance banks. These entities, with lower capital requirements, could focus on underserved markets — such as tier-III towns, MSME clusters, and rural areas with limited social security access.
The second day of the summit featured 15 sessions in total, with leaders from life insurance, general insurance, private equity, payments, wealth management, and microfinance sharing their insights on sectoral growth and regulatory reforms.
Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar also spoke at the event, emphasising that rupee internationalisation is not aimed at replacing the dollar but at reducing risk for Indian businesses by enabling more trade in rupees.
“Capital account convertibility is a gradual process, not a single event. We have been steadily liberalising capital inflows, and apart from a few restrictions on external commercial borrowings, most inflow routes are now open,” Sankar said.
He added that while the RBI’s current focus is on attracting inward capital, it will eventually ease rules on outward capital flows as the economy matures.
“Trade is largely free, with only procedural requirements. We have already released two draft proposals to simplify trade regulations — consolidating over 100 directives into a single framework. Our priority is to first facilitate inflows of capital, followed by calibrated outflows,” he explained.
Sankar also addressed questions about the Central Bank Digital Currency (CBDC), rejecting the notion that the project had stalled.
“We are taking a measured approach. Over 100 million transactions have already taken place. We’re technologically ready, but we want to fully understand potential impacts — such as whether CBDCs could replace bank deposits. Most countries are still experimenting, and so are we,” he said.
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