By Venkatachari Jagannathan
Chennai, Jun 2 (IANS): The failure to recover Rs.70.15 crore diverted to promoter company, transfer of promoters shares to 'fit and proper' promoters, submitting an incomplete a board approved business plan, non-reconciliation of two bank accounts, not strengthening internal controls, and deteriorating financial condition were the reasons for the Indian insurance regulator ordering the transfer of Sahara India Life Insurance Company Ltd's business to SBI Life Insurance Company Ltd.
In its order, the Insurance Regulatory and Development Authority of India (IRDAI) on Friday said the former failed to demonstrate compliance of its order dated December 30, 2020.
As per this order, the IRDAI had directed Sahara India Life to recover Rs 78.15 crore from major shareholder Sahara India Financial Corporation Ltd within three months and interest on that within a further period of one month.
The sum was diverted from Sahara India Life to Sahara India Financial Corporation in the name of security deposits.
According to IRDAI, only a sum of Rs 8 crore was recovered by Sahara India Life.
The IRDAI, in its December 30, 2020 order had directed the life insurer to find promoters who are 'fit and proper' as the existing four promoter companies - Sahara India Financial Corporation, Sahara Care Ltd, Sahara India Commercial Corporation Ltd, and Sahara Infrastructure & Housing Ltd - were no longer come under the 'fit and proper' definition.
The IRDAI found Sahara India Life or the promoters did not take any definitive steps in that regard.
According to the IRDAI, Sahara India Life's business was showing a run off trend and the company has been posting post tax losses since 2019-20.
The IRDAI said the life insurer was evasive in its replies and referred to the pending case with the Securities Appellate Tribunal (SAT). The sectoral regulator found Sahara India Life to be "recalcitrant in compliance with the directions of the Authority".
In order to protect the policyholders of Sahara India Life and its failing financial situation, the latter's business was ordered to be transferred to SBI Life, it added.
The SBI Life will take over the assets and liabilities of Sahara India Life's policies.
Reacting to the development the Sahara group told IANS: "IRDAI had earlier, in 2017, ordered the transfer of Sahara Life Insurance business to ICICI Prudential Life Insurance. However, this decision was later quashed by the Securities Appellate Tribunal (SAT) on July 28, 2017, and the order was in favor of Sahara India Life Insurance."
"Similarly, today (2.6.2023), IRDAI has once again ordered the transfer of Sahara Life Insurance business, this time to SBI Life. However, it is important to note that this matter is currently under judicial consideration with the SAT, and the next hearing is scheduled for June 6," it said.
However the group was silent on IANS questions about diversion of funds and other charges of the IRDAI.