Irdai said the contention of RGIC to differentiate between the promoters at the time of registration and shareholders of continuing insurers not be termed as promoter is "not tenable".
Regulator Irdai has imposed penalty of Rs 5 lakh each on Reliance General Insurance and Reliance Life Insurance (RLIC) for violating regulations and non-disclosure of information about subsidiary company.
In the matter of Reliance General Insurance, the Insurance Regulatory and Development Authority of India (Irdai) has asked the company as to why action should not be initiated against it for violation of insurance regulations and non-disclosure of information regarding status of Reliance Capital Ltd (RCL) being a subsidiary company.
Irdai said the contention of RGIC to differentiate between the promoters at the time of registration and shareholders of continuing insurers not be termed as promoter is "not tenable".
"...Regulations, do not provide for such differentiation and RCL shall be responsible for all compliances under the Insurance Act.
"It was observed that RGIC had not submitted convincing evidence that it had transparency disclosed to the Authority that RCL was a subsidiary company and tried to misrepresent the facts to the Authority," said the Irdai order.
Irdai further said: "It is established that RGIC has violated the provisions. The Authority...imposes a penalty of Rs 5 lakh on RGIC for the violation."
While in the matter of Reliance Life, Irdai imposed a penalty of Rs 5 lakh for non-disclosure of status of RCL being a subsidiary company.
"It was observed that Reliance Life Insurance had not submitted convincing evidence that it had transparently disclosed to authority that Reliance Capital Ltd was a subsidiary company, in its application for transfer of shares to Nippon Life Japan (in 2011) and tried to misrepresent the facts to the Authority," said the order.
Anil Ambani group controlled Reliance Life in 2011 sold 26% stake to Japanese insurer Nippon for $680 million.
The regulator in a letter in February 2006 had categorically communicated to RLIC that the group company and its shareholders shall be treated as joint promoters of RLIC and shall be responsible for all compliances under the insurance act.
Irdai said RLIC violated the provisions of regulations and the authority imposes a penalty of Rs 5 lakh.
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