The finance ministry will soon send the draft bill seeking to increase the FDI limit in the insurance sector to 100% to the Union Cabinet for approval, Financial Services Secretary M Nagaraju said on Monday.

"The Finance Minister has already given her approval, as announced in the Budget. We will now draft a bill with the assistance of the law ministry," he said during an interview.

After that, the Cabinet will review and approve the draft bill.

According to him, the bill will be introduced by the Department of Financial Services (DFS) during the current budget session.

Significantly, Finance Minister Nirmala Sitharaman suggested raising the insurance industry's foreign investment cap from 74% to 100% in her budget speech as part of new-generation financial sector reforms.

"The enhanced limit will be available to companies that invest the entire premium in India. The current barriers and conditions associated with foreign investment will be reviewed and simplified," she stated.

So far, FDI in the insurance sector has totaled Rs 82,000 crore.

To increase the FDI limit, the government will need to amend the Insurance Act 1938, the Life Insurance Corporation Act 1956, and the Insurance Regulatory and Development Authority Act 1999.

The bill will also simplify some procedures and rules.

The main piece of legislation governing insurance in India is the Insurance Act of 1938.

In 2015, the government increased the FDI cap in the insurance sector from 26% to 49%.