New Delhi, Feb 21 (IANS): The government Friday notified new rules for FDI in the insurance sector, that permit up to 49 percent FDI in the sector, up from 26 percent allowed earlier, subject to approval by the Foreign Investment Promotion Board(FIPB).

"FDI proposals up to 26 percent of the total paid-up equity of the Indian insurance company allowed on the automatic route, and FDI proposals which take the total foreign investment above 26 percent and up to the cap of 49 percent shall require FIPB approval," a finance ministry release said.

An ordinance on the matter was promulgated last December, after repeated disruption in the parliament proceedings during its winter session.

According to the rules, the foreign equity cap of 49 percent is applicable to all Indian insurance companies.

The rules say they shall not allow the aggregate holdings by way of total foreign investment in their equity shares by foreign investors, including portfolio investors, to exceed 49 percent of their paid-up equity capital, as also ensure that ownership and control shall remain at all times in the hands of resident Indian entities.

The rules also apply to insurance brokers, third party administrators, surveyors and loss assessors and other insurance intermediaries appointed under the provisions of the IRDA Act, 1999.