Former SBI Chairman Dinesh Khara Appointed To Lead Insurance Law Reform Panel

The finance ministry has proposed several changes to the Act, including increasing FDI in the insurance sector to 100 per cent, reducing paid-up capital, and allowing a composite license, among others

Former State Bank of India (SBI) chairman Dinesh Khara

Source : PTI

The Insurance Regulatory and Development Authority of India (IRDAI) has formed a seven-member committee, chaired by former State Bank of India (SBI) chairman Dinesh Khara, to review proposed amendments to the Insurance Act of 1938 and recommend a framework for their implementation.

The finance ministry has proposed several changes to the Act, including increasing foreign direct investment (FDI) in the insurance sector to 100 per cent, reducing paid-up capital, and allowing a composite license, among other revisions.

Panel Members

The committee members include: N. Kannan, former CEO of ICICI Prudential Life Insurance; Saurabh Sinha, former executive director at the Reserve Bank of India (RBI); Girish Radhakrishnan, former chairman and MD of United India Insurance; Alok Mishra, MD & CEO of the Micro Finance Institutions Network (MFIN); Rakesh Joshi, former IRDAI member; and legal expert L. Vishwanathan.

According to a Business Standard report citing top sources in the insurance sector, the committee will not propose any additional amendments and its mandate is strictly limited to working on the proposed changes.

“Once amended, the Insurance Act will have a lot of enabling provisions, for example, pertaining to 100 per cent FDI, penetration, and entry of new players. The mandate of the committee is to set boundaries. The committee will see how those provisions can be enabled through regulations and circulars,” as per the report citing familiar sources.

“The regulator wants to be in a state of readiness before the Act is amended,” the source added in the report.

Insurance Act Of 1938

The Insurance Act of 1938 established a broad legal framework for the insurance industry in India and led to the creation of IRDAI as the regulatory authority. It outlines the different types of insurance policies—life, general, and health—that can be offered in the country.

In the Union Budget, Finance Minister Nirmala Sitharaman proposed increasing the FDI limit in the Indian insurance sector from 74 per cent to 100 per cent. She also mentioned that the government is working on further reforms within the sector.

Last week, M. Nagaraju, Secretary of the Department of Financial Services, stated that internal consultations for the Insurance Amendment Bill have been completed. The bill will address issues related to investments and the repatriation of profits in the case of FDI. The introduction of a composite license for the insurance sector is also part of these reforms.

“We have almost completed the internal governmental consultations. Then, we will take the next course of action. Along with this, there are also other rules, how the investments will be made and the profits will be repatriated if there is FDI. That will also be part of the proposed amendment Bill, which will be brought to Parliament. Once it is approved, those rules also will be notified, so that all the reforms we intend to do in the insurance sector to improve penetration will be done through these measures.... Composite licence is also part of the reforms,” Nagaraju said.