An hour after appointing acting CMD for New India Assurance, finmin cancels order

Written by Sitanshu Swain | Mumbai | Updated: Nov 30 2011, 08:09am hrs
In the 1980s, Rajiv Gandhi had famously promised a government that not just worked, but also worked faster. The current dispensation seems to be working faster still to undo its own work. The finance ministry on Friday cancelled the appointment of AK Saxena as the officiating chairman and managing director of New India Assurance on the same day he was named for the job.

The state-owned insurer on Friday afternoon received a communication that Saxena was taking over with immediate effect. An hour later, the company got another message from the finance ministry, that the earlier order had been withdrawn. This is even as G Srinivasan has been holding the reins of New India in addition to United India Insurance for the past five months. Srinivasan was given charge of New India after the then chairman and managing director, R Ramadoss, was suspended.

Both the letters were sent in an hour's gap. The way both the letters were sent was a bit shocking, said a senior official of the NIA.

The New India issue does not bode well for filling up vacancies that will soon appear in state-owned insurers. M Prasad will retire as the CMD of the Agriculture Insurance Company (AIC) on November 30, and Yogesh Lohiya retires as CMD of General Insurance Corporation (GIC) on December 31. While interviews to replace them have been conducted, the suitable candidates are yet to be named. More than 10 senior general mangers who had appeared for the interview are waiting for the government's final decision.

What may have forced the government's hand in the case of New India Assurance is the fact that the CMD's post is not technically vacant, as Ramadoss is under suspension and could be reinstated if the Central Bureau of Investigation (CBI), which is probing his alleged role in a controversial deal given to Paramount Airways, doesn't find any substance in the allegation.

Earlier, a group of former CMDs of New India had brought to the notice of the government the precarious situation the company the largest general insurer in Asia-Pacific (excluding Japan is facing because it doesn't have a full-time CMD. Srinivasan is heading both United India and New India, who are competitors in the market. How is he supposed to take a proper decision when both are bidding for the same business asked one of them.

And it's not as if the New India case is unique. The finance ministry is yet to announce a full-time chairman for Life Insurance Corporation (LIC). Scheduled interviews for selecting the next LIC chief, lying vacant since June, were cancelled several times before being conducted in October.