1.          The Insurance Regulatory and Development Authority of India (herein after referred to as “the Authority”) issued a certificate of registration bearing No.127 to Sahara India Life Insurance Co. Ltd. (herein after referred to as “the insurer”) on 6^th February, 2004 to carry on business of Life Insurance in India in terms of Section 3 of the Insurance Act, 1938.  In terms thereof, the insurer is subject to the terms and conditions of the certificate of registration and is required to abide by the provisions of the Insurance Act,1938 (herein after referred to as ‘the Act’), the Insurance Regulatory and Development Authority Act, 1999, and other directions issued by the Authority from time to time by way of circulars and/or guidelines.

in Section 11 of the Act as returns to the Authority within six months from the end of the period to which they refer. The audited financial statements so filed by ‘the insurer’ for the year 2014-15 was reviewed as part of off-site monitoring process. Serious concerns as regards the governance aspects, declining business and financial position of the insurer were observed on review of the financial statements for the year ended 31^st March 2015 relevant extracts are as under:

5.         Despite so many opportunities to respond on the serious issues, the Insurer chose not to respond to the queries raised vide letter dated 18^th May 2016.Considering the serious nature of the concerns observed from the financial statements for the year ending 31^st March 2015, and the insurer not responding even after a lapse of more than ten months, a Show Cause Notice was issued vide letter reference 113.4/5/SLIC-ARA/F&A-life/228/2014-15 dated 9^th March 2017. The insurer has not responded even to the Show Cause Notice nor has sought any personal hearing in the matter. As the insurer did not respond to the Show Cause Notice and also has not sought for a personal hearing, it is understood that the insurer has no submissions to make in this aspect. 

 

6.         The line items under Current Assets (referred to under para 2 above) were observed to have increased further (Security Deposit has increased from A 71.34 crore  to A 78.24 crore and Sundry Recoverable increased from  A 6.24 crore to A 9.17 crore) as shown by the Annual Financial Statements for the FY 2015-16. Inputs/clarifications sought from the insurer thereon, vide IRDAI letter reference 113.4/5/SLIC-ARA/F&A-life/2015-16/213 dated 15^th February 2017 have remained unanswered.

 

7.         As time lapsed the perennial non-response of the insurer only made the lingering issues more and more serious. Non-response of the insurer shows that there is deliberate silence to avoid disclosure of material information on the financial position of the insurer to the Authority.  Therefore, the Authority has reasons to believe that the financial position of the insurer as per the financial statements does not reflect a true and fair view and therefore, the Sahara India Life Insurance Co. Ltd., is carrying on life insurance business in a manner likely to be prejudicial to the interests of holders of life insurance policies.

 

8.         Against the above background, the Authority had given a final opportunity to the insurer to make their submissions in person before Member (Life) on 10th June 2017 at 2 pm vide letter reference 113.4/5/SLIC-ARA/F&A-LIFE/ 62 /2014-15 dated June 9, 2017, e-mailed to the insurer. The Insurer was required to be present represented by Chairman of its Board, Independent Directors and the Chief Executive Officer (CEO).

 

9.         The Insurer was advised to show cause as to why the IRDAI should not conclude that the financial position of the insurer as per the financial statements for the year 2014-15 and subsequent years, does not reflect a true and fair view and therefore, the Sahara India Life Insurance Co. Ltd., is carrying on life insurance business in a manner likely to be prejudicial to the interests of holders of life insurance policies; and why appropriate proceedings should not be initiated against the Insurer under the provisions of the IRDA Act, 1999 and the Insurance Act, 1938 including invoking section 52A of the Insurance Act, 1938

 

10.       Vide e-mail dated 9th June 2017, the CEO of the Insurer responded that it will be very difficult for him to attend the meeting on 10th June 2017 and requested to reschedule the same for ensuing Monday or Tuesday. As requested by the insurer, hearing was held on 12th June 2017 (Monday) 11 am. The hearing was chaired by Sri Nilesh Sathe, Member (Life). The Insurer was represented by Sri Sanjay Agarwal, Chief Executive Officer and Sri K.K. Bajpai, Chief Finance Officer. From IRDAI the following officials were present, Sri H. Ananthakrishnan, GM (Legal); Sri R.K. Sharma, GM (F&A-NL); Smt. B. Padmaja, DGM (F&A-L).

 

11. On presenting the charges, the insurer admitted that there was lot of chaos in the last two years starting FY  2014-15 and attributed the reasons for the same to the following:

·         Key persons viz., Chief Financial Officer, Appointed Actuary and Company Secretary and Compliance Officer, resigned from the organization in FY 2014-15. Chief of Information Technology was on leave on medical grounds for about six months. All this has resulted in the absence of key persons for management of the company.

 

·         The Chairman of the Board was in judicial custody and people were not willing to join the company. As the insurer is having Corporate Office in Lucknow, it was difficult to find suitable resources.

 

·         As Appointed Actuary was not there, no new business was written from 1^st April 2016 to 15^th May 2016.

 

·         The insurer had given a rental deposit just less than A 80 Crore. The insurer had written to the group company to which the deposit is made to return the amount. The insurer confirmed that no refund was received as on date.

12. Considering the serious nature of the concerns observed by the IRDAI as regards the financial position of the insurer and further admissions of the insurer corroborating to the same during the personal hearing held on 12^th June 2017 as detailed at para 11 above, and based on other details on record, the IRDAI has reasons to believe that the insurer is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies and the orderly growth of the insurance sector as a whole. The Authority is of a considered view that this is a fit case for invoking of Section 52A of the Insurance Act, 1938 to appoint an Administrator to manage the affairs of the insurer under the direction and control of the IRDAI.

 

13.       Accordingly, in judicious exercise of powers vested with the IRDAI under Section 52A of the Insurance Act 1938 the IRDAI hereby, appoints Sri R.K. Sharma, GM- F&A-NL, IRDAI, as Administrator for managing the affairs of M/s Sahara India Life Insurance Co. Ltd., with Registration No. 127; Registered and Corporate Office#1, Sahara India Bhawan, Kapoorthala Complex, Lucknow 226024 with immediate effect.

 

14.  The directors, management, staff of the insurer shall extend all possible assistance and cooperation to Sri R.K. Sharma, Administrator to manage the affairs of the insurer. The Insurer is hereby, directed to ensure full and complete access and control to all books of account, registers, documents of title, all other documents of whatever nature and the database in the control and custody and render such assistance as may be required by the Administrator in discharge of his statutory duties.