Under the Insurance Act 2010, a foreign company is allowed to hold 60% of sponsor’s portion of shares of the total paid up capital. Violating the above law, Life Insurance Corporation of India applied for joint venture license in Bangladesh. It has submitted an application with 90% of its sponsor’s shares who is Pioneer Insurance Company Limited. Based on this ground, LIC was denied license.
In addition to the above, LIC had not submitted the required documents along with the application i.e written agreement between the sponsors when the company was formed, name of chairman, audit report on paid up capital and joint venture agreement. Owing to these non compliances Ministry of Finance is also not in favor of issuing license to LIC.
Mr. Fazul Karim, member – Insurance Regulatory and Development Authority, said that we will not allow the application to be amended, once submitted, and that will not give license to anyone violating the norms. However if deemed fit, IRDA will appoint a councilor to resolve the legal issues that may arise on account of incomplete information.
Currently IRDA has issued license to nine new life insurance and two non life insurance companies and expects more licenses to be issued to companies in the next year.
