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Insurance regulator IRDA on Friday made it mandatory for insurers to seek prior approval in case of stake transfer to domestic entities or financial institutions and set guidelines for seeking approval.
According to an IRDA circular, the regulator will carry out the requisite due diligence of the proposed transferee or shareholder prior to grant of approval for registration of transfer of shares under the provisions of Section 6A(4) of the Insurance Act, 1938 and for issue of shares to the proposed transferee or shareholder. The circular assume significance in the light of Bharti-AXA-Reliance Industries deal and Punjab National Bank proposing to pick up 30 per cent stake in Metlife India.
The regulator would also examine various issues including the minimum lock-in period of the proposed stakeholder before granting approval.
Besides, the IRDA will also look into additional capital in proportion of its shareholding at periodic intervals.
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