"Insurance companies should not land themselves in the same dilemma as Abhimanyu, the mythical character in Mahabharata who knew how to penetrate the enemy cordon, but did not know how to return," he warned.

Exhorting players in the insurance sector to display a high level of transparency, Rangachary said IRDA would be transparent. "We are going to be guided by the provisions of the law as they are drafted," he said, adding that IRDA will enforce very strong principles of corporate governance.

The IRDA Bill has defined Indian insurance company as any insurer being a company in which the aggregate equity holding of a foreign company does not exceed 26 per cent.

Inaugurating a two-day conference on insurance organised by the Federation of Indian Chambers of Commerce and Industry, Rangachary also said IRDA would not allow insurance licence holders to sell their licences as in the telecom sector. "If somebody wants to get out, he will have to surrender the licence to the authority," he said. Moreover, any transfer of share by insurance company over 1 per cent would need IRDA permission," he said. Rangachary clarified that companies would have to maintain a capital structure of Rs 100 crore in the form of equity in addition to mandatory deposits and preliminary expenses incurred to set up an office.

He made it clear that there would be no composite licences for doing life and general business together.

Speaking about powers vested with IRDA, he said the regulatory body has got no new powers. "What has been done is transfer powers that were vested with various authorities under the Insurance Act of 1938 to IRDA," he said.He dismissed fears of foreign companies siphoning off insurance premium from the country. He said no foreign company could siphon away the premium since foreign investors would be minority shareholders in the joint venture. Repatriation of funds will only be limited to meeting treaty obligations under reinsurance schemes, he said.

Over the last few years, the amount of premium that is given out in the form of reinsurance, has been coming down. At present, it stands at about 17 to 18 per cent of aggregate premium income, down from 25 per cent, he said.

Rangachary stressed that the possibility of the new law getting accepted by Parliament is bright. He said the bill covered new aspects which were not mentioned in the earlier Bill as requirements for capital structure, insolvency margin, admission of new players besides other points.