)
The Insurance Regulatory and Development Authority of India (Irdai) has proposed to tighten the norms for registration of insurance companies in the country. In draft regulations released on Monday, it sought the details of promoters’ voting rights, the products to be sold, financial performance projections and the areas the insurers would operate in.
According to the draft, new companies being registered will need to comply with the provision of “Indian owned and controlled”. Existing companies will have to comply with this within a year of the norms coming into force.
However, the regulator has not explained what “Indian owned and controlled” would mean.
“We have been told to broadly follow the guidelines given by the Foreign Investment Promotion Board on foreign investment and to ensure management control remains with Indian promoters at all times. This can be interpreted differently by different companies and gives some flexibility in joint venture agreements,” said the chief executive officer of a life insurance company.
For the “Indian management control” provision, insurers have been asked to follow the Indian Insurance Companies (Foreign Investment) Rules, 2015. According to these, a 49 per cent foreign equity investment cap is applicable to all Indian insurance firms. Companies have also been asked to ensure the ownership and control remain in the hands of resident Indian entities.
According to Irdai, the application for registration will be considered after taking into account factors such as capital structure, extent of obligation to provide insurance to the rural sector, unorganised workers, and backward classes of society. It will also look into the business plan for the succeeding five years, especially the plans to set up presence in rural areas.
If the application is rejected, the entity can appeal to the Securities Appellate Tribunal within 30 days of such communication being received.
The minimum paid-up equity share capital required for all categories including life, general, health and re-insurance is Rs 200 crore.
Irdai will accept comments till June 8.
