Country Profiles



Official Name: Republic of India

Government: Federal Republic

Head of State: President Ram Nath Kovind (since 25 July 2017)

Capital City : New Delhi

Main towns: Mumbai ( Bombay ), Kolkata ( Calcutta ), Delhi , Chennai ( Madras ), Hyderabad , Bangalore , Ahmedabad, Pune

Land area: 3,287,590 km2

Population: 1.353b (2018 est.)

Climate: Varied; humid subtropical in Ganges basin, semi-arid in north- west, tropical humid in north-east and most of peninsula, tundra in Himalayas

Currency: Indian rupee, INR

Exchange rate: US$1.00 = 74.93 Rupees

Measures: Metric system. Numbers are often written in lakhs (100,000) and crores (10m)

Language: Hindi, English, 17 other regional languages are officially recognised

Time: GMT + 5

Regulatory Scheme

India 's economic and monetary policies are set by the government in conjunction with the Reserve Bank of India (RBI-the central bank), which administers regulations. The Foreign Exchange Management Act (FEMA) regulates and controls foreign exchange. Under FEMA the government aims to progressively liberalize capital-account transactions. This legislation regulates the type of forex activities permitted, the use of real estate, remittance of dividends and profits overseas, forex trading, and access to banking facilities. The government also regulates current-account transactions, and the RBI will regulate capital-account transactions. All companies incorporated in India are now entitled to the same benefits and subject to the same regulations, regardless of their level of foreign equity.

India 's economic growth remains severely constrained by an unwieldy fiscal deficit which reached 6.6% of GDP in 1991/92, when India experienced a payments crisis. Both the centre (Indian central government) and the states finance their deficits by borrowing from banks, insurance companies, pension funds and other institutions, which in turn borrow from the public. Virtually the entire deficit goes to finance government consumption.


The financial services sector has for long been dominated by government-owned institutions. Indian banking policies are promulgated via the state owned entities and also through foreign exchange and investment regulations as mentioned above. The central government owns four long-term financial institutions-the Industrial Development Bank of India (IDBI), the Industrial Finance Corporation of India (IFCI), the Small Industries Development Bank of India (SIDBI) and the Industrial Investment Bank of India (IIBI)-and is the largest shareholder in the Industrial Capital and Investment Corporation of India (ICICI). These institutions in turn own three venture capital funds, Indian Venture Capital Fund (IVCF owned by IDBI), Technology Finance Corporation of India (TFCI), and ICICI Venture Fund. In addition, Unit Trust of India (UTI), Life Insurance Corporation (LIC) and General Insurance Corporation (GIC) also provide finance. During the BJP's tenure, significant steps have been taken to reduce bureaucratic restrictions on industry and encourage foreign direct investment (FDI). In particular, the financial and insurance sectors have been opened to private and foreign participation.

Stock Exchange

The Securities and Exchange Board of India (SEBI) is the regulator of the stock market. Private mutual funds, foreign institutional investors (FIIs) and country funds are active investors, and the stock market is subject to rigorous regulation. Despite heavy regulations the market has been plagued by scandals and corruption. The market utilizes a t+5 rolling settlement system for all frequently traded shares. There is a limited derivatives market, however it lacks liquidity and suffers from the same systemic issues as the rest of the exchange. Reform is needed before investors can be confident in the credibility of the Indian stock exchange.


The primary insurance regulators in India are the Insurance Regulatory and Development Authority (IRDA) and the Tariff Advisory Committee who oversees Insurance tariffs. The Insurance Regulatory and Development Authority Act 1999 and the Insurance Act 1938 and subsequent amendments are the primary Insurance regulations. The minimum capital requirement for direct non-life and life insurance business is 100 crore (ie. INR1 billion). The IRDA regulates the entry and exit of players, capital norms, and maintains strict control over the equity and solvency situation of insurers. For example, insurance companies are limited to central government securities not less than 20%, state government securities and other guaranteed securities (including central government securities) not less than 30% for non life and 50% for life. All investments stated above must be made in graded securities. Business lines subject to tariffs include fire, motor, marine hull, tea crop, engineering, industrial all risks, business interruption, personal accident and workmen's compensation, which together cover 70-75% of total nonlife premiums. There is complex Required Solvency Margin (RSM) legislation that sets out a sliding scale for RSM based on gross or net premiums. Business lines for non life include motor, fire and marine (40.0%, 20.4% and 6.9%). Business for life insurance includes individual life insurance (83%), individual pension (7%), group life insurance (5%) and group superannuation (5%). The market is heavily consolidated with an 87% share (2003) for the top 5 non life companies and a 99.5% market share for the top 5 life companies.

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