&
Ozg Registration, Approval
& Licensing Consultant
Ozg Center | New Delhi| Mumbai
Back Office Phone # 098.114.156.05-16-
27-60-81-91
Office Hours: Mon - Sat, 10:00 a.m. - 5:30 p.m. IST
Email:
license.consultant@ozg.co.in
Note:
To visit at any Ozg Center, an appointment is required.
To book an appointment, please visit to: ozgcenter.org/appointment
Insurance Regulatory and Development Authority (Irda) will examine the
issues arising out of a Non-Operating Financial Holding Company (NOFHC),
which would be a subsidiary of the promoter company, to hold stake in
an insurance company.
As per present rules, a subsidiary company cannot hold stake in an
insurance company. As per new bank license guidelines by the Reserve
Bank of India (RBI), a company who is a promoter of an insurance firm
will have to float an NOFHC for engaging in insurance activities.
This NOFHC will become a subsidiary of the promoter entity.
"Our rules do not allow subsidiaries to hold stake in an insurance
company. Hence, we will have to examine this matter of NOFHC holding
stake in insurance companies, as extant norms do not allow this. We will
look into this matter and decide on the changes that need to be made,"
said a senior Irda official.
RBI has issued a list of clarifications on questions raised by aspirants
of new banking licenses. In these clarifications, RBI has said that the
regulated financial services sector entities in which a Promoter Group
has ‘significant influence’ or ‘control’ (as defined in Accounting
Standard 23) will be held under the NOFHC. It added that while this is a
preferred structure, these requirements are subject to the regulations
of the respective regulators.
"The applicants may approach IRDA in this regard. The decision of IRDA
will prevail," said RBI in response to the questions raised on whether
these NOFHC would be eligible to become insurance company promoters.
The applicants had raised queries with respect to whether there would an
exception be made for insurance companies or would a specific approval
from the Irda be available enabling the NOFHC to qualify as a promoter
of an Insurance company.
Insurance companies like Birla Sun Life Insurance, Reliance Life
Insurance, Reliance General Insurance, Shriram Life Insurance, Bajaj
Allianz General Insurance and Royal Sundaram Allianz Insurance among
others have Indian promoters, who have banking aspirations.
In its new bank license guidelines, RBI had said that it could allow
corporate groups, non-banking financial companies (NBFCs) and public
sector entities to set up a bank only through a wholly-owned NOFHC. The
NOFHC, registered as an NBFC, will hold the bank and other financial
services entities of the promoter group.
According to the Irda (Registration of Indian Insurance Companies)
Regulations, 2000, an Indian promoter can be a company formed under the
Companies Act, 1956; not a subsidiary as defined in Section 4 of that
Act. This means subsidiaries cannot become promoters of insurance
companies.
Hence, post issuance of licenses, when some insurance companies would be
promoted by subsidiaries, the insurance regulator would need to make
some changes to its regulations to prohibit a violation of rules.
Business Standard, June 3, 2013
&
Ozg Registration, Approval
& Licensing Consultant
Ozg Center | New Delhi| Mumbai
Back Office Phone # 098.114.156.05-16-
27-60-81-91
Office Hours: Mon - Sat, 10:00 a.m. - 5:30 p.m. IST
Email:
license.consultant@ozg.co.in
Note:
To visit at any Ozg Center, an appointment is required.