The insurance regulator may be the veteran of many controversies, but he’s also known for his thoroughness.
Insurance Regulatory & Development Authority (Irda) Chairman J Hari Narayan, who is in the midst of fending off attempts from the Securities and Exchange Board of India (Sebi) to intrude into his turf, is not new to dealing with tough situations.
Unlike many of his colleagues, the former Indian Administrative Service Officer stood his ground against pressure from his minister when he was the water resources secretary at the Centre. Though Hari Narayan denied it, many say it was the reason for his departure from Delhi to Andhra Pradesh, where he was appointed chief secretary.
In Hyderabad, he took a similar position on the allocation of gas from the Krishna Godavari basin to the state so that idle capacity of nearly 9,000 Mw could be put to use.
Even during his tenure as joint secretary in the coal ministry he gave a large industrial conglomerate setting up a thermal power plant a tough time and ensured that the package did not affect the government’s interest.
But Hari Narayan is not only known for facing tough situations and controversies. During his stint as the water resources secretary, he was spearheading the talks over the Indus Water Treaty with Pakistan. It was Hari Narayan’s critical intervention and advice to Prime Minister Manmohan Singh during President Musharraf’s visit to New Delhi in April 2005 that altered the course of the India-Pakistan stand-off on Baglihar. At a time when the external affairs ministry was adopting a defensive posture on the issue, Hari Narayan showed the prime minister that India had a cast-iron case and if an objective neutral expert were to adjudicate, the case would be won by India.
This prompted Singh to accept Pakistan’s demand for neutral expert adjudication. And after he moved to Hyderabad, Fali Nariman is said to have approached Manmohan Singh to ask him to requisition his services for the negotiations. While the Andhra papers often criticised Hari Narayan for being away from the state, his negotiating skills helped the government clinch the dispute over the Baglihar dam in India’s favour. The episode showed Hari Narayan does his legal homework thoroughly before taking a stand.
He might be tough but he is also known to innovate and get into unchartered territory. So, he is credited with overseeing the first privatisation of a large public sector company — Hyderabad Allwyn — and also laying the foundation for Cyberabad during his stint as managing director of the Andhra Pradesh Industrial Development Corporation (APIDC).
Even at Irda, which he has headed for nearly two years, he has charged up the insurance sector. Whether it is putting checks on executive compensation, something the Reserve Bank of India is still working on, or curbing excessive charges on unit-linked insurance plans, Hari Narayan has tried to ensure that the rules of the game are not stacked in favour of the companies.
At the same time, the 62-year-old Irda chief has batted for the industry. He was at the forefront of the move to introduce a zero-load structure for the industry which is still trying to find its feet since opening up a decade ago. He has also started preparing companies to shift to a lower commission structure. Recently, he spoke about capping charges for traditional products.
Similarly, he has been supporting the move to increase the foreign investment ceiling for the sector from 26 to 49 per cent.
Insurance company executives also pointed out that Hari Narayan is flexible when it comes to ensuring that the rules are not anti-consumer or against the interests of the companies. So, when the government sought his comment lowering the cut-off date for an initial public offer, Irda was more than willing to change the rules.
It is not just the interests of the companies that are being protected. At the height of the financial crisis, Irda eased the rules for life insurers to invest in the infrastructure sector. So, against the overall cap of 10 per cent exposure to a company, a special dispensation was provided for core sector companies with the ceiling raised to 20 per cent.
In the next three years that Hari Narayan is going to spend at Irda, he has a heavy agenda. Not only does he have to ensure that the commission paid to agents falls, even if it does not move to a zero-load structure, but he also has to work jointly with Sebi to put in place listing norms for insurance companies and ensure that promoters offload stake in line with the rules.
For the next few months, however, he has his task cut out trying to ensure that the interests of the insurers are protected, and so is his turf.
