With many major insurance companies being part of a financial conglomerate, the linkages between banks and insurance companies are a matter of “concern”, said the Survey.
A financial stability issue regarding the promoting banks in the conglomerate might have an amplifying effect on the insurer, it said. So, it was essential to build firewalls, preventing contagion from one sector to another in times of stress.
“The Indian insurance sector is well capitalised but significantly exposed to the banking system” due to such linkages, it said. Factors such as the ability to raise capital and adequate reinsurance capacity are expected to be key in ensuring long-term stability to the insurance sector, it added.
New Pension Scheme
Penetration and distribution of the New Pension Scheme (NPS) remains a major challenge, despite being designed very attractively, with many consumer- friendly features and a low-cost structure. The scheme has failed to take off despite direct government co-contribution of Rs 1,000 per account from last year under the Swavalamban scheme. Hence, several state governments, autonomous bodies, and undertakings are in dialogue with the Pension Fund Regulatory and Development Authority for extending the NPS to their employees, the survey said.
So far, under the Swavalamban scheme, 90,256 subscribers have been enrolled in the current financial year. In 2010-11, a total of 301,920 subscribers were added.The subscriber base for the mandatory government sector has crossed 1.5 million, with a corpus approaching Rs 12,407 crore.