The IRDAI Guidelines dated 11 February 2026 provide a comprehensive regulatory framework for establishing, operating, extending, and closing a Liaison Office (LO) in India by an insurance company registered outside India. These guidelines supersede earlier instructions and are effective from the date of issue.
This version eliminates repetition and presents the requirements in a streamlined format.
What Is a Liaison Office Under IRDAI Regulations?
A Liaison Office is a non-commercial office in India that acts solely as a communication channel between the overseas insurer’s Head Office (HO) and Indian entities. Under Clause 1 of the Guidelines, an LO:
- Cannot undertake commercial, trading, industrial, or insurance solicitation activities
- Cannot issue policies or underwrite risks
- Cannot generate revenue in India
- Must sustain itself exclusively through inward foreign remittances from the HO via normal banking channels
The LO functions strictly as a representational and research unit.
Eligibility Criteria for Opening a Liaison Office
An overseas insurer must have a minimum net worth of USD 65 million and a profit-making track record for the immediately preceding three financial years. As prescribed under Clause 2:
- Net worth must not be less than USD 65 million.
- Net worth equals paid-up capital plus free reserves minus intangible assets.
- Financial statements must be certified by a qualified accountant in the home country.
Exceptional Relaxation
IRDAI may relax the net worth requirement in cases involving:
- Foreign state-owned enterprises
- Reinsurers with strong credit ratings
- Specialized insurers with demonstrated expertise
- Bilateral trade or strategic significance considerations
Application Procedure
The insurer must apply in Form IRDAI-FIC-1 and pay a non-refundable processing fee of USD 6,000. Under Clause 3(a), the application must include:
- Certificate of registration from the home country regulator
- Certificate of incorporation
- Details of subsidiaries and associates
- Memorandum and Articles of Association
- Latest audited financial statements (last three years)
- Certificate from home regulator permitting LO in India
- Letter of Comfort confirming financial support
- Board resolution authorizing submission
IRDAI conducts due diligence before granting approval. If the insurer is incorporated in a country sharing a land border with India, IRDAI may seek views from the Ministry of External Affairs before approval.
Approval Validity and Extension
Initial approval is valid for three years. The LO must be established within six months from the date of approval; otherwise, approval is deemed withdrawn. Extension may be granted for an additional three years if:
- The LO has complied with all conditions
- The extension application is filed at least two months before expiry
- A non-refundable fee of USD 5,000 is paid
In exceptional cases involving strategic importance, FDI contribution, technology transfer, or bilateral trade relevance, IRDAI may permit continuation beyond six years on a case-by-case basis.
Permitted Activities
A Liaison Office may only perform representational and research functions. Permitted activities include:
- Representing the overseas insurer in India
- Conducting market research
- Undertaking feasibility studies in insurance
- Acting as a communication channel between HO and Indian entities
Prohibited Activities
An LO cannot engage in any commercial or financial activity in India. Specifically, it cannot:
- Undertake insurance business
- Solicit or market policies
- Borrow or lend money
- Accept deposits
- Enter commercial contracts except for operational necessities
- Acquire immovable property other than lease up to three years
Operational and Compliance Requirements
Strict compliance with IRDAI conditions, FEMA, RBI permissions, and Indian law is mandatory. Key obligations under Clauses 5 and 6 include:
- Maintain only one bank account
- Fund all expenses exclusively through HO remittances
- Obtain Permanent Account Number (PAN)
- Register with Registrar of Companies if applicable
- Appoint a Principal Officer as Nodal Officer
- Inform IRDAI of any regulatory action by home regulator within 15 days
- Permit inspection or investigation by IRDAI
Only one LO under the same management may operate in India at any time. Approval is non-transferable, including in mergers or acquisitions.
Financial Reporting and Annual Activity Certificate
Annual financial statements and an Annual Activity Certificate must be submitted within 60 days of the end of each financial year. The LO must prepare:
- Balance Sheet
- Statement of Income and Expenditure
- Cash Flow Statement
These must be certified by an independent Chartered Accountant. The Annual Activity Certificate must confirm:
- Activities remained within permitted scope
- Expenses were funded only through HO remittances
- No local revenue was generated
- Bank transactions reflect legitimate LO operations
A report of research activities conducted during the year must accompany the certificate.
Closure Procedure
Closure requires filing Form IRDAI-FIC-2 at least two months before expiry of approval. Under Clause 8 , the insurer must:
- Publish a public notice in one national English daily and one regional language newspaper
- Submit a Chartered Accountant certificate confirming settlement of liabilities, disposal of assets, absence of pending taxes or employee dues, and no unrepatriated proceeds
- Confirm no pending legal proceedings in India
- Submit ROC compliance report where applicable
IRDAI grants closure approval and informs RBI.
Restriction on Parallel Presence
An overseas insurer cannot simultaneously operate a Liaison Office and a Branch Office (FRB), joint venture, or subsidiary in India.
The LO must be closed before obtaining approval for operational insurance presence.
Regulatory Action for Non-Compliance
IRDAI may withdraw approval if the LO:
- Fails to submit required reports
- Violates activity restrictions
- Does not cooperate with inspection
- Breaches approval conditions
Before withdrawal, IRDAI provides an opportunity to be heard.
Conclusion
The IRDAI 2026 Guidelines establish a tightly regulated, non-commercial framework for overseas insurers seeking representational presence in India. The regime ensures financial discipline, restricted activity scope, mandatory reporting, and regulatory oversight.
Foreign insurers must strictly comply with eligibility criteria, operational limitations, and reporting obligations to maintain approval and avoid enforcement action.
Source: IRDAI Circular dated 11/02/2026 regarding Guidelines on Establishment and Closure of Liaison Office in India by an Insurance Company registered outside India