IRDAI finds Sahara Life promoters 'fit and proper'

India's insurance regulator has not come across any concern relating to Sahara Life Insurance Company Ltd even though SEBI has cancelled the licence of Sahara Mutual Fund on the ground its promoters are not 'fit and proper' to run the mutual fund business.

"We have not come across any concern relating to Sahara Life. It is a small company in the life insurance sector. The company's expenses are within limit," T.S.Vijayan, chairman, Insurance Regulatory and Development Authority of India (IRDAI), told IANS on the phone on Thursday.

When it was pointed out that Securities and Exchange Board of India (SEBI) action against Sahara Mutual Fund was on the grounds that the promoters are not 'fit and proper' Vijayan said: "We have not come across any issue about Sahara Life."

On July 28, India's securities market regulator ordered cancellation of certificate of registration of Sahara Mutual Fund as it found the fund house, Sahara Asset Management Company (AMC) and Sahara Sponsor not "fit and proper" to carry on the business.

According to a the market's regulator's statement, its whole-time member Prashant Saran passed the order as Sahara Mutual Fund along with Sahara AMC and Sahara Sponsor were found to be no longer "fit and proper" to carry out the business of Mutual Fund.

However insurance industry experts differ from Vijayan's views.

The criteria whether the promoter(s) are "fit and proper" is one of the fundamental criteria while licensing an insurance company.

"SEBI cancelling the licence of a mutual fund on 'fit and proper' grounds should ring alarm bells in other financial regulators," D.Varadarajan, a Supreme Court advocate and expert in insurance, company, competition law, told IANS.

According to him life insurance contract is of longer duration and is a business of promise to pay the nominee the sum assured in the event of death of the policyholder.

On the other hand mutual fund investment is generally is of short/medium term duration.

Insurance officials are of the view that solvency, management expenses are operational issues whereas 'fit and proper' criteria is more fundamental aspect.

A retired senior official of IRDAI too expressed similar views to IANS and added: "Insurance regulator should at least review Sahara Life Insurance's operations."