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Not a merger with Sahara Life, just transfer of policyholders: SBI Life

Business Standard



SBI Life, a subsidiary of country’s biggest lender State Bank of India (SBI), has said it is not a merger between the two companies but only a transfer of the policyholder related assets and liabilities of Sahara Life Insurance.


On Friday regulator Irdai directed SBI Life Insurance to takeover the policy liabilities of around two lakh policies along with assets of stressed Sahara India Life Insurance Co Ltd (SILIC).


The decision was taken at the meeting of the Insurance Regulatory and Development Authority of India (Irdai) in view of deteriorating financial health of the SILIC.


Following the Irdai order, SBI Life assured two lakh policyholders of “high levels” of service and commitment as is accorded to our customers.


“We have started and we are expeditiously working on the process of integrating all these policyholders in our systems. While the full integration may take some time, we request these policyholders to reach out to us on our helpline number 1800 267 9090 or email us at saharalife@sbilife.co.in,” it said

SBI Life will shortly reach out to these policyholders and intimate them about various touch points and manner of servicing for a smooth transition, it said.


Sahara Life Insurance was also not allowed to underwrite new business. Thereafter, further directions were issued to the insurer to meet the regulatory requirements.


“Despite being provided ample opportunities and sufficient time to ensure compliances, SILIC has failed to comply with directions of the authority and take any affirmative steps to protect the interests of its policyholders,” the regulator had said.


Further, the policy data of SILIC reveals that the company’s portfolio is showing run-off trend. The financial position has been deteriorating with rising losses and higher percentage of claims to total premium.


“If the trend is allowed to continue, the situation will worsen and lead to erosion of capital and SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” Irdai had said.


It said the action against SILIC has been taken after due consideration of all the facts and circumstances.


The authority added in its meeting held on June 2, 2023 that the action was warranted to protect the interest of the policyholders of SILIC.


Further, Irdai said it will continue to monitor the situation and also issue necessary directions as required in the interest of the policyholders of SILIC.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)



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FinMin mulls changes in insurance laws to boost penetration: Report



The finance ministry is contemplating changes in insurance laws, including reduction in minimum capital requirement, with a view to increasing the insurance penetration in the country.


Insurance penetration in India increased from 3.76 per cent in 2019-20 to 4.20 per cent in 2020-21, registering a growth of 11.70 per cent. Insurance penetration measured as the percentage of insurance premium to GDP witnessed handsome growth during the year, mainly due to the outbreak of COVID-19.


The ministry is doing a comprehensive review of the Insurance Act, 1938 and also looking at making relevant changes to help push growth of the sector, sources said, adding the process is at a preliminary stage.


One of the provisions being considered is lowering the minimum capital requirement of Rs 100 crore for setting up an insurance business, the sources said.


Easing capital requirement would allow entry of differentiated insurance companies like in the banking sector, which has categories like universal bank, small finance bank and payments bank.


With the ease of entry capital norms, sources said, there could be entry of companies focussed on micro insurance, agriculture insurance or insurance firms with regional approach.


So for them, the solvency margin requirement would also be different but without compromising on policyholders’ interest, the sources said.


Entry of more players would not only push penetration but result in greater job creation in the country.


Presently, there are 24 life insurance companies and 31 non-life or general insurance firms, including specialised players like the Agriculture Insurance Company of India Ltd and ECGC Limited.


Last year, the government brought an amendment in the Insurance Act to allow increasing foreign holding in insurers from 49 per cent to 74 per cent. Besides, Parliament passed the General Insurance Business (Nationalisation) Amendment Bill, 2021, allowing the central government to pare stake to less than 51 per cent of the equity capital in a specified insurer, paving the way for privatisation.


In 2015, the Insurance Act was amended for raising the foreign investment cap from 26 per cent to 49 per cent. All these amendments since privatisation of the insurance sector have led to exponential growth.


According to a study, India is likely to become the sixth largest insurance market in the world in the next 10 years, supported by regulatory push and rapid economic expansion.


Total insurance premiums in India will grow by an average 14 per cent per annum in nominal local currency terms over the next decade, making India the sixth largest in terms of total premium volume by 2032 from 10th largest in 2021.


Both life and non-life insurers collected a premium of Rs 8.2 lakh crore during 2020-21.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)



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Govt starts process for filling posts of independent directors in PSBs, FIs



The government has initiated the process of filling about 100 vacancies of independent directors in public sector banks and financial institutions to meet regulatory norms of corporate governance.


There have been vacancies at the independent director level across the public sector space leading to regulatory non-compliance, sources said.





As per the Companies Act 2013, every listed public company shall have at least one-third of the total number of directors as independent directors.


Since many listed public sector banks (PSBs) and some financial institutions (FIs) are short of mandated number of directors, it is in violation of Companies Act as well as listing norms of market regulator Securities and Exchange Board of India, sources said.


For example, some of the banks like Indian Overseas Bank, Indian Bank and UCO Bank are not compliant with independent director norms.


Except State Bank of India (SBI) and Bank of Baroda, the position of chairman in most of the state-owned banks is vacant. The posts of Workman Director and Officer Director, representing the employees and officers of the banks, respectively, have been vacant for the past 7 years.


According to a study, there were 72 public sector undertaking (PSU) companies as a part of the NIFTY 500 in both 2019 and 2020. PSUs forming part of NIFTY 500 had 133 fewer independent directors in 2020 compared to the earlier year.


There are 12 public sector banks, four public sector general insurance companies while one life insurance firm. Besides, there are some specialised insurance players like Agriculture Insurance Company of India Ltd.


In addition, there are state-owned financial institutions like IFCI, IIFCL, ECGC Ltd and EXIM Bank.


As many as 52 per cent of the director posts in the 11 nationalised banks were vacant, All India Bank Employees’ Association (AIBEA) said in a letter written to Finance Minister Nirmala Sitharaman recently.


Of the 175 board-level positions, 91 are lying vacant and there is urgent need to address the issue, AIBEA general secretary C H Venkatachalam said in the letter.


The posts of Workman Director and Officer Director have remained vacant in 11 nationalised banks for the last seven years, he said, adding, the board of each bank has 7-9 board level vacancies.


This defeats the very purpose for which these posts were envisaged and created to take care of the varied interests and fields of banking operations of the banks, he added.


The Boards of Directors of nationalised banks are guided by the provisions of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous Provisions ) Scheme, 1970.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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