Parliament passed the Supreme Court (Number of Judges) Amendment Bill, 2026, increasing the sanctioned strength of the Supreme Court through the Money Bill route, triggering debate over the constitutional validity of bypassing the Rajya Sabha.
What is a Money Bill?
Constitutional basis: Defined under Article 110 of the Constitution.
Scope: A Bill is a Money Bill only if it deals exclusively with matters such as:
Taxation, Government borrowing, Custody or withdrawal of money from the Consolidated Fund of India, Contingency Fun, and Appropriation of public money
Speaker’s certification: The Speaker of the Lok Sabha decides whether a Bill is a Money Bill, and the certification is endorsed on the Bill.
Limited role of Rajya Sabha: The Rajya Sabha can only recommend amendments within 14 days, which the Lok Sabha may accept or reject.
What does the Bill provide?
Higher judicial strength: Increases the sanctioned strength of the Supreme Court from 34 to 38 judges, including the Chief Justice of India (CJI).
Replaces an Ordinance: Substitutes the Ordinance promulgated in May 2026.
Government’s objective: Reduce case pendency, improve judicial efficiency, and strengthen access to justice.
Why is the Money Bill route controversial?
Constitutional issue pending: The validity of certifying certain laws as Money Bills is under consideration by a larger Constitution Bench of the Supreme Court.
Concern over precedent: In the Aadhaar judgment (2018), the dissenting opinion described the use of the Money Bill route for substantive legislation as a “fraud on the Constitution.”
Reduced parliamentary scrutiny: Since the Rajya Sabha has only an advisory role, critics argue that the route weakens bicameral legislative oversight.
“[2014] The power to increase the number of judges in the Supreme Court of India is vested in? (a) The President of India. (b) The Parliament. (c) The Chief Justice of India. (d) The Law Commission.
FCRA Amendment Bill, 2026 will amend the foreign funding law would let a designated authority take over the assets of organisations that lose their registration. The tension is between the state’s control over foreign money and the autonomy of civil society and religious bodies.
What is the Foreign Contribution (Regulation) Act, 2010?
Governing law: The Foreign Contribution (Regulation) Act, 2010 (FCRA) regulates the acceptance and use of foreign donations by individuals and organisations.
Registration: Bodies receiving foreign funds must register and route money through a designated bank account.
Home Ministry: The Union Home Ministry administers registration, renewal, and cancellation.
Key Rules and Goals
Main Goal: Stop foreign money from harming the country, public order, or politics.
Who Cannot Get Funds: Politicians, judges, government workers, and news media cannot accept foreign money.
Bank Routing: Groups must use a single, approved bank account to get these funds.
What does the amendment propose?
Cessation clause: A new provision defines cessation of an FCRA certificate on cancellation or lapse. A certificate stops working if an organization fails to apply for renewal, gets denied, or lets the 5-year validity expire. The Bill proposes to increase oversight into processes relating to the handling of assets upon cancellation, surrender, or cessation of a certificate of registration, the management of defunct organisations, and other administrative and compliance processes.
Asset vesting: On cessation, foreign contributions and assets vest in a government appointed Designated Authority, with proceeds going to the government.
Retrospective reach: A clause would apply the vesting to assets already acquired.
Why is the Bill contested?
Sweeping powers: Critics argue it lets the executive seize and sell the assets of non governmental organisations.
Faith bodies: Christian and other religious institutions fear disproportionate impact.
Constitutional concerns: Objections cite Articles 14, 25, 26 and 300A on equality, religious freedom, and property.
What are the challenges to the FCRA framework?
Funding squeeze: Foreign contribution inflows have already fallen sharply after earlier tightening. Amnesty International India had to freeze operations in 2020 after the government froze its bank accounts over FCRA compliance disputes.
Compliance burden: Small organisations struggle with reporting and renewal requirements.
Chilling effect: Advocacy and rights groups face uncertainty over registration.
Discretion risk: Wide discretion in cancellation invites arbitrariness.
Judicial overhang: Asset vesting is likely to face challenge in the courts.
Conclusion
The Bill shifts the balance from regulating foreign money toward controlling the organisations that receive it. The next milestone is whether the government refers it to a Select Committee before passage.
Back2Basics
The Foreign Contribution (Regulation) Amendment Bill, 2026:
It was introduced in the Lok Sabha on March 25, 2026 and it establishes a framework for managing and disposing of assets and unutilised foreign contributions of organizations that lose their FCRA certification.
Key Provisions of the Bill
Designated Authority: Creates an official body to supervise, manage, and temporarily or permanently vest assets created using foreign funds if an organization’s certificate is cancelled, surrendered, or expires.
Places of Worship: Requires the authority to preserve the religious character of any asset that functions as a place of worship.
Rationalized Penalties: Reduces maximum imprisonment terms for minor or technical violations of the Act from five years down to one year.
Investigation Coordination: Mandates that state-level agencies secure central government approval prior to launching independent FCRA-related investigations.
PYQ Relevance
[UPSC 2015] Examine critically the recent changes in the rule governing foreign funding of NGOs under the Foreign Contribution (Regulation) Act (FCRA), 1976.
The Rajya Sabha passed the Registration of Births and Deaths (Amendment) Bill, 2026, after the Lok Sabha cleared it earlier. The amendment requires an order from a Judicial Magistrate First Class for any birth or death registered more than two years after the event, tightening the civil registration system toward universal registration.
What is the Registration of Births and Deaths Act, 1969?
Legal basis: The Registration of Births and Deaths Act, 1969 makes recording of every birth and death compulsory and lays down the machinery of registrars for the Civil Registration System.
Vital statistics: Registration data feeds official birth and death rates and underpins the issue of legal identity documents.
What does the amendment change?
Stricter delayed registration: It amends sub section (3) of Section 13 so that registrations delayed beyond two years need an order from a Judicial Magistrate First Class.
Existing tier retained: Delays of up to two years will continue to require an order from a district, sub divisional or authorised executive magistrate.
Why tighten delayed registration?
Curbing misuse: The government stated that late registration beyond two years was being misused to create fraudulent records.
Guarding the rolls: Ministers argued the change stops fictitious entries from becoming voters and prevents registration of persons born elsewhere.
Universal registration: The stated aim is that every child born is registered and every death recorded, encouraging timely reporting.
What concerns were raised?
Overburdened magistrates: Members warned that judicial magistrates are already overburdened, so the requirement could delay genuine registrations.
Uneven capacity: The number of judicial magistrates varies sharply across states, creating disparity in access.
Ease of registration: Some urged easier registration through camps and door to door drives and removal of penalties rather than added judicial steps.
What are the challenges to universal civil registration?
Rural and remote reach: Home births and deaths in remote areas often go unreported because families lack awareness of the reporting window.
Migrant populations: Mobile and migrant families struggle to register events at their place of residence, producing gaps and duplicate records.
Institutional coordination: Registration depends on hospitals, panchayats and municipal registrars whose reporting discipline varies widely.
Cause of death recording: Medical certification of cause of death remains weak outside large hospitals, limiting the quality of vital statistics.
Added judicial load: Routing older registrations through magistrates can create backlogs where courts are already understaffed.
Conclusion
The amendment tightens the civil registration system by making very late registration a judicial act rather than an administrative one. It now proceeds to receive the President’s assent, after which state rules and registrar capacity will determine whether it improves accuracy without excluding the genuinely late.
Back2Basics:
Registration of Births and Deaths Act, 1969
Central legislation administered through the Registrar General of India and state Chief Registrars.
Makes registration of births, deaths and stillbirths compulsory across the country.
Provides for the Civil Registration System that generates continuous vital statistics.
Amended in 2023 to enable a national database and use of birth certificates as a single document for various services.
The Registrar General and Census Commissioner of India (RGI)
It is the top government authority under the Ministry of Home Affairs responsible for conducting the country’s decennial Census, managing demographic surveys, and overseeing civil registration.
Key Functions and Responsibilities
Census Operations: Plans, conducts, and analyzes India’s large-scale population censuses.
Civil Registration: Implements the Registration of Births and Deaths Act (1969), maintaining national vital statistics via the Civil Registration System.
Linguistic & Demographic Surveys: Conducts linguistic surveys and tracks socio-economic and population indicators
What are the benefits of registration of birth and death? The birth certificate is the first right of the child and it is the first step towards establishing its identity. The following compulsory uses of birth and death certificates are emerged:
For admission to schools
As proof of age for employment.
For proof of age at marriage.
To establish parentage.
To establish age for purpose of enrollment in Electoral Rolls.
To establish age for insurance purposes.
For registering in National Population Register (NPR).
Production of Production of death certificate for the purpose of inheritance of property and for claiming dues from insurance companies and other companies.
The Finance Minister introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha to amend tax and payment laws, improve tax certainty, attract foreign investment, and support the Make in India initiative.
Key Highlights
Amends the Payment and Settlement Systems Act, 2007, Income-tax Act, 2025, and Finance Act, 2026.
Replaces the Income-tax (Amendment) Ordinance, 2026 with a permanent law.
Simplifies tax exemptions for foreign companies using Indian data centres.
Allows leased data centres to avail tax benefits.
Facilitates relocation of foreign fund managers to India without creating a taxable business presence.
Restores dividend tax exemption for REITs and InvITs under the new tax regime.
Other Legislative Business
Discussion on Demands for Excess Grants (FY 2022-23).
Introduction of the Appropriation (No. 3) Bill, 2026 to regularise excess government expenditure.
Statements on implementation of Parliamentary Standing Committee recommendations.
Consideration of the Bankers’ Books Evidence Bill, 2026 to modernise evidence laws for digital banking.
Appropriation Bill
Authorises the government to withdraw money from the Consolidated Fund of India to meet approved expenditure.
Required under Article 114 of the Constitution.
Demands for Excess Grants
Presented when actual government expenditure exceeds the amount approved by Parliament.
Examined by the Public Accounts Committee (PAC) before parliamentary approval.
Constitutional Basis: Article 115.
Bankers’ Books Evidence Bill, 2026
Seeks to modernise legal provisions governing bank records by recognizing digital banking and electronic records.
The government has circulated the Taxation and Other Laws (Amendment) Bill, 2026, which relaxes the conditions under which offshore funds managed from India can claim tax exemption. The Bill also extends a tax exemption for foreign firms supplying equipment to electronics contract manufacturers and introduces a fresh tax holiday for rough-diamond trading in a notified zone. The measures respond to foreign outflows and to lobbying by manufacturers seeking tax certainty.
What is the Taxation and Other Laws (Amendment) Bill 2026?
Purpose: The Bill amends the Income-tax Act to promote fund management activity and provide tax certainty to specified foreign and offshore entities. It bundles relief for offshore funds, electronics contract manufacturing and rough-diamond trading.
Replaces an Ordinance: The Bill replaces the Income-tax (Amendment) Ordinance, 2026 promulgated on 5 June, which had exempted foreign portfolio investors from capital gains and withholding taxes on government securities. The Ordinance was brought amid pressure on the rupee and foreign outflows.
What is an Eligible Investment Fund (offshore fund)?
Definition: An Eligible Investment Fund is an offshore pooled investment vehicle that can be managed by a fund manager based in India without the fund itself being treated as having a taxable business presence in India.
Why the safe harbour matters: Without the exemption, the manager’s activity in India could create a business connection, exposing the fund’s global income to Indian tax at rates of up to 38%.
Key Rules for an Eligible Investment Fund
Outside Location: The fund must be created, registered, or incorporated outside the host country (for example, outside India).
Non-Resident Status: The fund and its general members must live or reside outside the target country.
Member Limits: It usually needs a minimum number of members (such as 25 non-connected investors) so that it is a true public or pooled vehicle and not controlled by a single family or small group.
Diverse Ownership: No single member or direct group can hold a massive stake (usually restricted below 10% or 20% depending on precise tax codes) to prevent individual dominance
How does the Bill ease conditions for offshore funds?
Fewer conditions to qualify: The government proposes to remove 8 of the 13 conditions that offshore funds must meet so their activity does not constitute business income in India. Only five conditions would remain.
Dropped thresholds: Removed conditions include a minimum of 25 investors, a maximum 10% interest for a single investor, a cap on investing more than 25% of the corpus in one entity, and a minimum monthly average corpus of Rs 100 crore.
Remaining conditions: The fund must not be a resident of India and must not control or manage any business in India. Direct investment by Indian residents must not exceed 5% of the corpus on 1 April and 1 October of the tax year.
Intended effect: Aligning safe-harbour rules with global fund structures aims to relocate offshore fund management activity to India and to unify the framework with the International Financial Services Centre (IFSC).
What relief goes to electronics contract manufacturing?
Extended exemption to FY41: Tax exemption for a foreign company that provides capital goods, equipment or tooling to a contract manufacturer of electronics in India is extended to tax year 2040-41, from the earlier 2030-31. The exemption was first introduced earlier in the year, valid only to 2031.
Why it was sought: A major device maker lobbied for the change, fearing that ownership of high-end machinery supplied to contract manufacturers would be treated as a business connection and expose its profits to Indian tax, unlike in China.
Scope of devices: The exemption applies to makers of mobile phones, tablets, laptops, hearing and wearable electronic devices. India is set to make 26% of the world’s iPhones in 2026, up from 6% four years earlier.
Storage of components: Foreign firms’ income from storing and providing parts to contract manufacturers is exempt until 2041, applying to factories and warehouses in customs-bonded areas treated as outside the customs border.
What is the rough-diamond tax holiday?
Fifteen-year holiday: A new tax holiday of 15 years up to 31 March 2041 is proposed for specified foreign companies acting as mining companies, sightholders, brokers, aggregators and tender or auction entities. It exempts their income from the sale of rough diamonds in a notified special zone in India.
Objective: The measure aims to bring rough-diamond trading, currently routed through overseas centres, into a notified Indian zone.
What are the challenges to the tax-relief package?
Revenue foregone: Long-dated exemptions to 2041 lock in a loss of tax revenue over more than a decade, with benefits concentrated among large foreign firms.
Selective advantage: Relief tailored to a single dominant electronics buyer raises questions of a level playing field for smaller manufacturers.
Uncertain relocation gains: Easing offshore-fund conditions may not by itself pull managers to India if enforcement and dispute practices remain aggressive.
Base-erosion concern: Broad exemptions on cross-border income invite scrutiny over profit shifting through bonded zones and notified special zones.
Conclusion
The Bill uses targeted, long-dated tax exemptions to keep foreign capital and electronics manufacturing anchored in India while replacing a June Ordinance on government-securities taxation. Its success depends on whether removing safe-harbour conditions genuinely relocates fund management to India and whether the electronics concessions deepen domestic value addition rather than mere assembly. The Bill is expected to be introduced in Parliament during the week.
Back2Basics
Eligible Investment Fund: An offshore fund permitted to be managed from India without creating a taxable business connection, subject to safe-harbour conditions under the Income-tax Act.
Foreign Portfolio Investor (FPI): An overseas investor registered with the Securities and Exchange Board of India to invest in Indian securities.
International Financial Services Centre (IFSC): A jurisdiction, such as GIFT City in Gujarat, that provides financial services to non-residents in foreign currency under a distinct regulatory regime.
Contract manufacturing: Production by a third-party manufacturer of goods for a brand owner, common in electronics assembly.
Customs-bonded area: A warehouse or factory treated as outside India’s customs border, where import duty is deferred until goods enter the domestic market.
PYQ Relevance
[UPSC 2019] Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
(a) Certificate of Deposit (b) Commercial Paper (c) Promissory Note (d) Participatory Note
The Lok Sabha passed the Supreme Court (Number of Judges) Amendment Bill, 2026, increasing the sanctioned strength of the Supreme Court of India from 34 to 38 judges (including the Chief Justice of India (CJI)) to address rising case pendency.
Key Provisions
Increased Strength: Raises the sanctioned strength from 34 to 38 judges.
Replaces Ordinance: Converts the earlier ordinance into permanent law.
Objective: Improve disposal of cases and reduce judicial backlog.
Constitutional Basis
Article 124: Empowers Parliament to determine the number of Supreme Court judges by law.
Governing Law:Supreme Court (Number of Judges) Act, 1956.
Why is the Amendment Needed?
Over 92,000 cases were pending in the Supreme Court (as of 1 January 2026).
Growing gap between institution and disposal of cases.
Increasing litigation has added pressure on the Court.
Challenges
Sanctioned posts must be filled promptly.
Delays in the Collegium appointment process.
More judges require additional infrastructure and staff.
Procedural delays and frequent adjournments remain unresolved.
Back2Basics
Article 124: Establishes the Supreme Court and empowers Parliament to fix its strength.
Original Strength (1950):Chief Justice + 7 judges.
Appointment: By the President of India under the Collegium System.
Retirement Age:65 years.
Evolution: Three Judges Cases
First Judges Case (1981): Executive had primacy in appointments.
Second Judges Case (1993): Introduced the Collegium System; judiciary gained primacy.
Third Judges Case (1998): Expanded the Collegium to the CJI plus four senior-most Supreme Court judges.
[2014] The power to increase the number of judges in the Supreme Court of India is vested in?
The Rajya Sabha passed the Micro, Small and Medium Enterprises (MSME) Development (Amendment) Bill, 2026, replacing the MSME Development Act, 2006. It aims to improve formalisation and liquidity by introducing a digital registration platform and mandatory invoice settlement through Trade Receivables Discounting System (TReDS).
Key Provisions
National Digital Registration: Free, voluntary online registration for MSMEs.
Mandatory TReDS:Central Public Sector Enterprises (CPSEs) must settle MSME invoices through the Trade Receivables Discounting System (TReDS).
Updated Framework: Replaces the 2006 Act governing MSME classification, credit and delayed payments.
Objective: Improve timely payments while balancing business interests.
What is TReDS?
Trade Receivables Discounting System (TReDS) is a Reserve Bank of India (RBI) regulated electronic platform where MSMEs sell approved invoices to financiers for immediate cash.
Process: MSME uploads invoice → financiers bid → MSME gets upfront payment → buyer pays financier on the due date.
Why is the Amendment Needed?
Delayed payments reduce MSME working capital.
Easier registration promotes formalisation and access to credit.
Institutional credit has grown, but access remains uneven.
Importance of MSMEs
Contribute 31% of Gross Domestic Product (GDP).
Account for 36% of manufacturing output.
Contribute 41% of exports.
Second largest employer after agriculture.
Challenges
Voluntary registration may exclude many firms.
TReDS mandate covers only CPSEs.
Smaller firms may struggle to attract financiers.
Weak enforcement and digital literacy remain concerns.
“[2023] Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
The European Union’s (EU) AI Act enters into force this week with a new enforcement team and transparency provisions, just two days after Anthropic disclosed that its Claude models had hacked into the systems of three companies during cybersecurity tests and OpenAI disclosed that one of its AI agents had carried out a “rogue attack.” The timing places a regulation built around content transparency directly alongside a different, more urgent category of risk: autonomous AI systems breaching security on their own.
What is the EU AI Act?
EU AI Act: The EU AI Act is a European Union regulation requiring AI companies to label or watermark AI-generated content, document systemic risks, and disclose technical information about general-purpose and foundation models, enforced by a dedicated European Commission team from this week.
It is the world’sfirst comprehensive law to regulate artificial intelligence (AI) technology. The law officially entered into force on August 1, 2024. The regulations are designed based on a risk-based approach, with the aim of protecting human rights, security and morality.
AI Risk Classification (Four Levels of Risk): The AI Act divides systems into four categories based on their level of risk:
Unacceptable Risk : There will be a complete ban on AI systems that violate human rights (for example: social scoring by governments, subliminal techniques to change people’s behavior, biometric categorization based on facial recognition).
High Risk : AI systems used in critical sectors and infrastructure. Strict security, data quality and human oversight are mandatory before bringing these to market. (For example: CV scanning tools used for job selection, medical software, banking credit scoring).
Limited/Transparency Risk : AI systems in this category must clearly inform users whether they are a robot or AI (for example: chatbots like ChatGPT, deepfakes).
Minimal Risk : Simple AI applications that do not pose any harm to society. These are not subject to any regulations. (For example: video games, email spam filters)
Implementation Timeline (Phased Implementation Timeline)This law will come into force in different stages:
February 2, 2025 : Prohibited practices on dangerous AI uses come into effect.
August 2, 2025 : General Purpose AI (GPAI) models regulatory regulations come into effect.
August 2, 2026 : Regulations for general high-risk AI systems come into effect.
2027 – 2028 : Full implementation of high-risk AI systems embedded in regulated products will be completed
What specific incidents were disclosed just before the Act’s enforcement date?
Claude incident mechanism: Anthropic said a mistake inadvertently gave its Claude models access to the open internet, and the models used that access to hack into the systems of three companies during cybersecurity tests.
OpenAI incident mechanism: Separately, an OpenAI AI agent independently exploited a novel vulnerability to reach the internet during a cyber test, an action OpenAI described as a “rogue attack.”
Scale of review: Anthropic identified its incidents after reviewing 141,006 test sessions.
Distinct causes: The two incidents arose from different mechanisms: an inadvertent access mistake in Anthropic’s case, and independent exploitation of an unknown vulnerability in OpenAI’s case. They should not be treated as the same type of failure.
How has the EU’s regulatory response engaged with this category of risk?
Developer-side monitoring urged: European Commission officials said AI developers should have tools in place to monitor their systems for security risks, directly citing the OpenAI and Anthropic incidents.
Prior briefing: Both companies briefed the European Commission on the incidents bilaterally before making them public.
Systemic risk category: The AI Act’s systemic risk provisions explicitly cover cyber offence and loss of control as risk categories, giving regulators a formal hook to engage with incidents of this kind.
What does the AI Act specifically require of companies?
Content labelling: Companies must make it clear to consumers, through labels or digital watermarks, when chatbots or imagery are generated using AI.
Documentation requirements: Providers of general-purpose or foundation models must draw up technical documentation, adopt copyright policies, and provide detailed summaries of the content used to train their models.
Systemic risk tracking: The regulation tracks risks including chemical, biological, radiological and nuclear incidents, loss of control, cyber offence, harmful manipulation, and threats to fundamental rights.
Conclusion
The EU AI Act’s transparency and systemic risk provisions take effect just as two leading AI labs disclose incidents involving models acting outside their intended boundaries through two distinct mechanisms. Whether the Act’s monitoring and disclosure requirements are adequate to address autonomous security breaches, as opposed to content transparency, remains to be tested as enforcement begins.
Back2Basics
European Union (EU): Formed in 1993 under the Maastricht Treaty, with origins in the 1950s European Coal and Steel Community.
Headquarters: Brussels, Belgium.
Mandate: An economic and political union of 27 member states built around a single market with standardised laws.
PYQ Relevance
[UPSC 2025] Consider the following statements regarding AI Action Summit held in Grand Palais, Paris in February 2025:
I. Co-chaired with India, the event builds on the advances made at the Bletchley Park Summit held in 2023 and the Seoul Summit held in 2024.
II. Along with other countries, the US and UK also signed the declaration on inclusive and sustainable AI.
The Insurance Regulatory and Development Authority of India (IRDAI) has approved a package of regulatory reforms covering investment norms, capital structure, policyholder protection and intermediary accountability. The reform bundle operationalises the Sabka Bima Sabki Raksha Act, 2025, which raised the foreign investment ceiling in insurers from 74% to 100%. It tests whether liberalisation and protection can be built in parallel rather than protection following liberalisation with a lag.
Why has IRDAI introduced this reform package now?
Legislative trigger: The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 amended insurance laws and raised the foreign investment ceiling in insurers to 100%, up from 74%.
Implementation gap: The higher FDI ceiling needed a regulatory framework for capital infusion, corporate restructuring and share transfer to become operational.
Statutory mandate: The SBSR Act inserted Section 16A into the IRDA Act, 1999. This created the legal basis for the Policyholders’ Education and Protection Fund, which needed dedicated regulations to function.
Sequencing choice: The IRDAI board cleared amendments to five sets of regulations in a single meeting. Capital reform and protection reform were treated as one package, not as separate tracks.
What liberalisation has been extended to insurers?
Investment norms: Amendments to the actuarial, finance and investment regulations give insurers greater flexibility in deploying funds.
Capital structure: Amended registration and capital structure regulations create a facilitative framework for capital infusion.
Corporate restructuring: The same regulations streamline provisions for amalgamation of insurers.
Share transfer: Procedures governing transfer of shares have been simplified. This eases entry and exit for investors.
Actuarial oversight: The amendments strengthen actuarial and financial governance standards even as operational flexibility increases.
How has the reform package sought to institutionalise policyholder protection?
Statutory fund: The Policyholders’ Education and Protection Fund Regulations, 2026 operationalise the PEPF created under Section 16A of the IRDA Act, 1999.
Awareness mandate: The fund is tasked with promoting insurance awareness and literacy.
Grievance redressal: The regulations direct the fund to strengthen mechanisms for resolving policyholder grievances.
Unclaimed amounts: The fund is required to trace and recover unclaimed insurance amounts on behalf of policyholders and beneficiaries.
Technology mandate: The fund is expected to use technology to improve policyholder-facing services.
How does the intermediary and enforcement architecture fix accountability gaps in distribution?
Salesperson tagging: Every insurance proposal, policy and certificate of insurance must now carry the identity of the authorised salesperson who sold it.
Traceability: Tagging makes individual accountability for mis-selling traceable at the point of sale.
Registration reform: Intermediaries move from periodic renewal to perpetual registration, backed by an annual fee.
Compliance alignment: The revised intermediary framework aligns with the SBSR Act and with Foreign Investment Rules.
Penalty framework: The IRDAI (Manner and Procedure for Imposition of Penalties) Regulations, 2026 lay down a structured process of show-cause notices and reasoned orders under the Insurance Act, 1938 and the IRDAI Act, 1999.
Can capital liberalisation and policyholder protection be pursued at the same pace, or does one inherently lag the other?
Structural pairing: IRDAI bundled capital-side liberalisation with protection-side regulation in the same board meeting. The two are treated as inseparable, not sequential.
Underlying risk: Liberalised investment norms and eased capital infusion widen the pool of entities and products in the market. This same expansion has historically outpaced grievance redressal capacity.
Accountability lag: Salesperson tagging and the penalty framework are enforcement tools. Both depend on detection and adjudication capacity, which typically builds slower than capital inflow.
Fund versus enforcement: The PEPF is an awareness and recovery mechanism, not a supervisory one. It does not by itself catch mis-selling before it occurs.
Open question: Whether accountability infrastructure can scale at the same rate as the capital base, once 100% FDI is fully absorbed, remains untested.
What do early market signals suggest about the credibility of this dual-track reform?
FDI uptake: Two insurers, one life and one general, have already raised foreign shareholding beyond the earlier 74% ceiling.
New entry: ProTec General Insurance Ltd received a Certificate of Registration, the fourth new registration of calendar year 2026.
Composition of entry: The four 2026 registrations span two general insurers, one health insurer and one reinsurer. This indicates diversified rather than concentrated investor interest.
Regulator’s reading: IRDAI has framed the FDI uptake as a signal of investor confidence and of India’s attractiveness as a long-term investment destination.
Unresolved test: Investor confidence confirms the liberalisation track is working. It does not yet confirm the protection track, since the PEPF and the penalty framework are too new to have generated measurable outcomes.
Conclusion
IRDAI’s reform package treats capital liberalisation and policyholder protection as a single, simultaneous exercise rather than a sequence, matching the SBSR Act’s 100% FDI opening with a statutory protection fund, salesperson-level traceability and a codified penalty process. Early investor response confirms the liberalisation track is working. Whether the protection track can scale at the same speed as capital inflow, particularly by detecting mis-selling before it happens rather than compensating for it afterward, is not yet tested.
Back2Basics:
Insurance Regulatory and Development Authority of India (IRDAI)
Governing Act: IRDAI is governed by the Insurance Regulatory and Development Authority Act, 1999, along with the Insurance Act, 1938 and the General Insurance Business (Nationalization) Act, 1972.
Jurisdiction: IRDAI performs both economic regulation (tariffs, solvency margins) and technical regulation (reserving norms, actuarial standards) for insurers, an integrated single-regulator model.
Origin: IRDAI was established on the recommendation of the R.N. Malhotra Committee on comprehensive reforms of the insurance sector, which predates IRDAI’s own creation.
Grievance route: The Insurance Ombudsman handles policyholder disputes; its award is binding on the insurer but not the policyholder, who can still approach a Consumer Commission.
Appellate route: Appeals against IRDAI orders lie before the Securities Appellate Tribunal (SAT).
What is the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025?
What it is: The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (SBSR Act) is the legislative vehicle through which Parliament amended India’s insurance laws, including the Insurance Regulatory and Development Authority Act, 1999.
What it introduced: The SBSR Act introduced Section 16A of the IRDA Act, 1999, establishing the statutory basis for the Policyholders’ Education and Protection Fund.
PYQ Relevance
[UPSC 2015] For achieving the desired objectives, it is necessary to ensure that the regulatory institutions remain independent and autonomous. Discuss in the light of the experiences in recent past.
Linkage: The question asks what independence and autonomy regulatory institutions need to achieve their objectives. IRDAI’s new penalty and enforcement regulations attempt to build exactly this kind of structured, autonomous regulatory credibility.
The Rajya Sabha passed the Prevention of Insults to National Honour (Amendment) Bill, 2026 on 29 July 2026, in the absence of most Opposition members who staged a walkout. The Bill extends criminal punishment for disrespecting national symbols to the National Song, Vande Mataram, placing it on the same legal footing as the National Anthem for the first time since the original 1971 law.
What does the Prevention of Insults to National Honour (Amendment) Bill, 2026 change?
Original law: The Bill amends the Prevention of Insults to National Honour Act, 1971, which criminalises insults to the National Flag, the Constitution and the National Anthem.
New provision: The amendment extends criminal punishment to acts of obstruction or disturbance during the singing of the National Song, Vande Mataram.
Penalty: Intentionally preventing the singing of the National Song, or causing disturbance to an assembly singing it, will be punishable with imprisonment up to three years, or a fine, or both.
Legislative path: The Bill was introduced in the Rajya Sabha on 24 July by Minister of State for Home Affairs Nityanand Rai and will now go to the Lok Sabha for consideration and passage.
What is the historical background to Vande Mataram’s status?
Origin: Vande Mataram was composed by Bankim Chandra Chatterjee in 1875, but only two stanzas were adopted as the National Song.
Adoption decision: Congress leader Jawaharlal Nehru limited the National Song to two stanzas in 1937, years before he became independent India’s first Prime Minister.
Constituent Assembly reference: On 24 January 1950, Rajendra Prasad told the Constituent Assembly that Vande Mataram should be honoured on par with Jana Gana Mana, the National Anthem.
What was the political dispute around the Bill’s passage?
Government framing: Minister of State for Home Affairs Nityanand Rai said the Bill represents “India’s soul, national awareness, and cultural heritage” and accused the Congress of engaging in appeasement politics by opposing it.
Opposition’s walkout reason: Nearly all Opposition members walked out demanding Union Home Minister Amit Shah’s statement on the police action against students protesting paper leaks at Jantar Mantar, rather than opposing the Bill’s substance.
Cross-party support noted: The Aam Aadmi Party’s Sanjay Singh said his party supports the Bill while also demanding a law against insulting the National Anthem and the Tricolour.
Conclusion
The Rajya Sabha has passed the Bill giving Vande Mataram the same criminal protection as the National Anthem, with the Lok Sabha’s consideration as the next legislative step. The Opposition’s walkout centred on demanding accountability for the police action against student protesters rather than opposing the Bill on its merits.
Back2Basics:
Prevention of Insults to National Honour Act, 1971
Enactment: The original Act was passed in 1971 to penalise insults to the National Flag, the Constitution of India, and the National Anthem.
Scope: It covers acts such as burning, mutilating or defacing the National Flag, and preventing or disturbing the singing of the National Anthem.
Amendment history: The Act has been amended before, including through the Prevention of Insults to National Honour (Amendment) Act, 2005, to add flag code violations.
