New Delhi, July 24: The Insurance Regulatory and Development Authority (IRDA) has clarified that equity holdings by foreign institutional investors (FIIs) and domestic mutual funds (MFs) in an Indian company will not be under the ceiling of 26 per cent foreign equity in the insurance business.The guidelines, notified by the IRDA, have fixed a rural obligation of 15, much less than those for the existing players. In the case of existing insurers, the authority will decide their rural obligation in accordance with their quantum of business recorded for the year ending March 2000.
The Indian promoter, as defined by the IRDA, would include a co-operative society registered under law, a banking company, a company under the Companies Act, 1956, a public financial institution and a person who is an Indian citizen or a combination of persons who are Indian citizens.
The decision will pave the way for entry of the Indian banks and some cooperative entities like IFFCO in the insurance business. Many institutions have already announced their decisions to begin the insurance business.
The authority has come out with a detailed procedure for appointment of actuaries. It has said that the life insurer would not be able to carry on business without an appointed actuary. A person eligible to become actuary has to be an ordinary resident in India, a fellow member of the actuarial society of India an employee of the life insurer, in case of life insurance business an employee of the insurer or a consulting actuary, in case of general insurance business a person who has not committed any breach of professional conduct a person against whom no disciplinary action by the actuarial society of India or any other actuarial professional body is pending he is not an appointed actuary of another insurer and not over the age of 70 years.
For every insurer, there would be a rural obligation--five per cent in the first financial year, seven per cent in the second financial year, ten per cent in the third financial year, 12 per cent in the fourth financial year and 15 per cent in the fifth year of the total policies.
In respect of a general insurer, the obligation will be two per cent in the first financial year, three per cent in the second financial year, five per cent thereafter of the gross premium income written directly in that year.
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