Photo of Indranath Bishnu

Partner in the general corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Indranath advises on foreign direct investments, mergers and acquisitions and joint ventures and specializes in the Insurance industry. He has advised multiple corporations, both Indian and foreign, in relation to the establishment, operation, management and control of insurance companies in India. Pursuant to the amendments of the Insurance Act as well as the Foreign Investment Policy relating to the insurance sector in 2015, Indranath has been involved in multiple deals involving the entry, exit and increase of ownership of stakeholders in the said sector.

 

He also advises on mergers and acquisitions in other financial services sectors such as mutual funds, credit information companies, commercial banks, credit card companies, and payment and settlement systems. Other sectors that he has advised in include civil aviation, retail, consumer goods and services, and real estate. He can be reached at indranath.bishnu@cyrilshroff.com

Appointment of Common Directors between Intermediaries and Insurers IRDAI Resolves the Conundrum!

Common Directors under Section 48A of the Insurance Act, 1938

The appointment of the same individual on the Board of Directors (“Board”) of both an insurer and an insurance intermediary (brokers, corporate agents and web aggregators) (“Common Director”) is currently prohibited under Section 48A[1] of the Insurance Act, 1938 (“Act”). However, the Insurance Regulatory and Development Authority of India (“IRDAI”) is empowered to permit an intermediary to be a director on the Board of an insurance company subject to the conditions and restrictions as may be imposed by the IRDAI. Therefore, if an insurer were to appoint Common Directors on its Board, a prior IRDAI approval is a critical requirement.

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Point of Sales Persons An Alternate Distribution Channel for Insurers

Introduction

The Insurance Regulatory and Development Authority of India (“IRDAI”) permits insurance companies and intermediaries to appoint individuals (i.e. natural persons) as Point of Sales Persons (“PoSPs”). PoSPs are essentially individuals who are permitted to carry out activities pertaining to solicitation and marketing of insurance policy products and act as distribution channels for insurers or intermediaries. In accordance with the provisions of the Insurance Act, 1938, sale and solicitation of insurance products can only be carried out by entities licenced by the IRDAI, i.e. either insurers or intermediaries. PoSPs, despite not being “licenced persons”, are “qualified persons” (as discussed below) and carry on the activity of sale and solicitation of insurance products. They are sponsored by insurers or intermediaries to carry on sale and solicitation activities.

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Insurance Linked Securities

Background and Introduction

Insurance linked securities (ILS) is an umbrella term covering instruments that are designed to transfer insurance risks to the financial market. The performance of ILS is typically also linked to the possible occurrence of such insurance risks. ILS, in global financial markets, is not a novel concept and the earliest known issuance of ILS by reinsurance companies was in the US in 1992, in the aftermath of Hurricane Andrew. In fact, ILS has been used multiple times by reinsurance companies in the US when their capacities were severely affected by the occurrence of natural disasters like earthquakes and hurricanes and even man-made disasters like the World Trade Center bombing.

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Evolving Insurance Landscape in IFSC

The Gujarat International Financial Tec-City (“GIFT City”) in Gandhinagar, Gujarat, is India’s first operational greenfield smart city, housing a domestic tariff zone and an International Financial Services Centre (“IFSC”) in a Multi-service Special Economic Zone (“SEZ”). As part of developing India’s very own and first IFSC, both Indian and foreign entities are permitted to establish and operate IFSC Insurance Offices (“IIO”) from GIFT City, upon obtaining the requisite approvals. The IIOs have the advantage or the ability to transact in freely convertible foreign currencies in offshore markets, while being situated within the territorial borders of India. From 2015 to early 2020, the Insurance Regulatory and Development Authority of India (“IRDAI”) issued guidelines for IIOs (“IRDAI IIO Guidelines”). Thereafter, pursuant to the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority (“IFSCA”) was empowered on October 1, 2020 as the unified regulator with wide powers to develop and regulate financial products, financial services, and financial institutions in IFSCs, including IIOs.

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FDI Liberalisation in Insurance Companies and Harmonisation of Insurance Regulations What Has Changed in the Year Gone By

The Union Budget 2021-22 announced the proposal to liberalise Foreign Direct Investment (“FDI”) in Indian insurance companies from the existing 49% to 74% with effect from August 2021. The aforesaid proposal was subsequently formalised by way of introduction of the Insurance (Amendment) Act, 2021 (“Amendment Act”), to amend the Insurance Act, 1938. Please click here to refer to our earlier blog for more details in this regard.

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Policyholder Data Sharing in India

Introduction

With a vision to transform India into a digitally empowered society and knowledge economy, the Indian government[1] launched the Digital India initiative and mindful of its impact, it has been taking several steps to ensure greater accessibility as well as greater safety around internet based services. This, coupled with heightened internet based services and digital connectivity,[2] led the government to launch several digital services[3] and some are remarkably successful – these range from unified payments interface (UPIs) to DigiLocker[4]. According to India Brand Equity Foundation, the rising use of UPIs strongly indicate that more and more people in India are adopting a digital lifestyle[5] – UPI saw its highest ever number of transactions in April 2022 at 5.58 billon, amounting to INR 9.83 trillion. DigiLocker hit the mark of 101 million users on March 19, 2022, evidencing the adoption and success of this initiative[6].

Continue Reading Policyholder – Data Sharing in India – Time for Consent – Based Regime?

Liberalisation of FDI In Insurance Companies – A look at the step(s) taken since the Big Budget Announcement

The industry is now well versed with the move to liberalise foreign direct investment (“FDI”) in Indian insurance companies to 74%, from the existing cap of 49%. The announcement was first made by the Finance Minister Ms. Nirmala Sitharaman on February 1, 2021, as part of her Budget presentation. The move followed the raise in FDI limits to 100% in insurance intermediaries, which was announced by Ms. Sitharaman in July 2019 and effected in September 2019.
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Pledge of Shares of an Insurance Company - A discussion on IRDAI clarifications

Introduction

We have in our recent post discussed the clarifications issued by the Insurance Regulatory and Development Authority of India (“IRDAI”)  in relation to Transfer of Shares of an insurance company. These clarifications were notified pursuant to the circular issued to all CMDs and CEOs of insurance and re-insurance companies on July 22, 2020 (“Circular”). However, the Circular also discussed certain critical issues relating to creation of pledge over shares of an insurance company.
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Transfer of Shares of an Insurance Company - The much-needed clarifications

The Insurance Regulatory and Development Authority of India (“IRDAI”) issued a circular (“Circular”) on July 22, 2020 to all CMDs and CEO of insurance and re-insurance companies with a view to bring more clarity on issues relating to the transfer of shares of insurance companies and the creation of pledge over shares of insurance companies Set out below is a brief summary of the clarifications provided by the Circular in relation to transfer of shares of an insurance company:

 A. Clarification on IRDAI’s guidelines for transfer of shares of listed companies
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IRDAI’s Approach to ‘Fit and Proper’ Assessment in light of the Sahara Life Saga

Introduction

An issue of significant relevance to financial regulators world-over is the fitness and propriety of key shareholders of financial entities. The objective of this blog is to analyse IRDAI’s approach to assessment of ‘fit and proper’ status of significant owners of insurers, especially in light of the order passed by the IRDAI in the matter of M/s Sahara India Life Insurance Company Limited (“Sahara Life”) on December 30, 2020 (“IRDAI Order”). Before we delve into IRDAI’s approach in this regard, it is important to trace the chronology of events, leading to the IRDAI Order.
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