The admission of “serious” lapses by the management of Sahara India Life Insurance has forced the insurance regulator to take over the administration of the insurer.

The Insurance Regulatory and Development Authority of India (IRDAI), on Monday, named RK Sharma, General Manager, IRDAI, as administrator to manage the affairs of the insurer with immediate effect. The move came after the admission of “serious” lapses by a team of the company led by its CEO Sanjay Agarwal, said an official of IRDAI.

It was not a one-day decision and there was a long correspondence with the company after the authority had observed “serious” concerns as regards governance aspects, and declining business and financial position of the insurer for the year ended March 31, 2015. The regulator observed a continued decline in the company’s performance with new and renewal businesses falling year-on-year. There was also significant increase in certain items under current assets during the year.

For instance, the IRDAI found that security and other deposit went up substantially in 2014-15 over the previous year to ₹71.34 crore from ₹10 lakh while sundry recoverables rose to ₹6.24 crore from ₹1.81 crore.

According to the Sahara India Life management, “There was a lot of chaos in the last two years starting FY15” on account of resignations of key persons, including the chief financial officer, actuary, company secretary, and compliance officer. The chief of information technology was on leave on medical grounds for about six months.

It also said that as the chairman of the board was in judicial custody, people were not willing to join the company. As the insurer had its corporate office in Lucknow, it was difficult to find suitable resources, the company informed the regulator.

In the long-running SEBI-Sahara case, the Supreme Court in August 2012 had ordered the group to deposit with the regulator over ₹24,000 crore collected from nearly three crore investors via issue of bonds.

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