Banks and insurance
Caps come from the Consolidated FDI Policy 2020 as amended by later Press Notes. Financial activities not regulated by a financial-sector regulator need government approval.
| Activity | Cap and route | Key conditions |
|---|---|---|
| Private-sector banks | 74%: automatic up to 49%, government route above 49% | Limit includes portfolio investment by FPIs and NRIs. Residents must hold at least 26% of paid-up capital at all times, except in a wholly owned subsidiary of a foreign bank. |
| Public-sector banks | 20%, government route | Subject to the Banking Companies (Acquisition and Transfer of Undertakings) Acts 1970/80. |
| Insurance companies | 100%, automatic (LIC: 20%, automatic) | Press Note 1 (2026), in legal effect from 2 May 2026: subject to IRDAI verification and licence; at least one of the chairperson, managing director and CEO must be a resident Indian citizen. |
| Insurance intermediaries | 100%, automatic | Brokers, reinsurance brokers, corporate agents, TPAs, surveyors, MGAs and repositories. Majority foreign-owned intermediaries must be limited companies; a bank acting as intermediary keeps its banking cap. |
NBFCs, pension funds and exchanges
Financial activities regulated by RBI, SEBI, IRDAI or PFRDA follow that regulator’s conditions; the land-border test applies to every activity.
| Activity | Cap and route | Key conditions |
|---|---|---|
| NBFCs and other regulated financial services | 100%, automatic | Activities regulated by RBI, SEBI, IRDAI, PFRDA, NHB or another notified regulator, subject to that regulator’s conditions. Unregulated financial activities need prior government approval. |
| Pension funds | 49%, automatic | Investors must obtain registration from PFRDA and comply with the PFRDA Act, 2013. |
| Asset reconstruction and credit information companies | 100%, automatic | Credit information companies need RBI regulatory clearance; a single FPI must hold below 10%, and acquisitions above 1% must be reported to RBI. |
| Stock and commodity exchanges, depositories, clearing corporations | 49%, automatic | Subject to SEBI’s regulations for exchanges, clearing corporations and depositories. |
| Any activity: land-border investors | Government route | Applies where the investor is an entity or citizen of a country sharing a land border with India, or a beneficial owner (more than 10% or control) is a citizen of one (Press Note 2 of 2026); file on the FIF/NSWS portal. Indirect land-border ownership up to 10% without control: automatic, with prior reporting. |
| White-label ATM operators | 100%, automatic | Stated in the sources without further conditions. |
Other conditions stated
- Non-resident individuals buying listed shares. Since 12 June 2026 any non-resident individual may buy listed shares through a designated bank branch, each below 10% and all such individuals together up to 24% (FEMA Non-debt Instruments Rules).
- Downstream investment. Investment by a foreign-owned Indian company counts as indirect foreign investment; a bank’s strategic downstream investment counts for the investee.
- Resident control. Insurers need a resident Indian citizen as chairperson, MD or CEO; private banks need at least 26% resident shareholding, except a foreign bank’s wholly owned subsidiary.
- Unregulated activities. Financial activities outside RBI, SEBI, IRDAI, PFRDA or NHB regulation need prior government approval for foreign investment.
- Land-border beneficial owners. An investor from a land-border country, or a beneficial owner (more than 10% or control) who is a citizen of one, needs the government route (Press Note 2 (2026)). The Ministry of External Affairs comments on such proposals. Land-border investors taking up to 49% in a fast-track sector, where resident Indians keep majority ownership and control, have a 60-day decision target (DPIIT SOP, 4 May 2026).
Note: Clearing the FDI cap does not license the business. Each activity needs registration or authorisation from its regulator before it starts; see Regulators and registrations.
How the insurance cap changed
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (assent 20 December 2025) raised the FDI limit in insurers from 74% to 100% and cut the net owned funds required of foreign reinsurers from ₹5,000 crore to ₹1,000 crore. Press Note 1 (2026) of 9 February 2026 moved insurers and intermediaries to 100% automatic, subject to IRDAI verification; LIC stays at 20%. It took legal effect from the FEMA rules amendment of 2 May 2026.
For the generic framework that applies across sectors, see FDI routes and caps and land-border investors.
What to check next
- Map each product line to its row above; a group may carry a 74% bank cap and a 100% NBFC cap at the same time.
- Check that portfolio holdings by FPIs and NRIs are counted inside the 74% bank limit.
- Confirm that the activity is regulated by a named regulator; if not, plan for government approval.
- Screen every shareholder up to the beneficial owner for land-border links and the 10% or control test.
- Confirm the current text of Press Notes 1 and 2 (2026) and the June 2026 RBI Master Direction before filing.