Insurance regulator IRDA has slapped a fine of Rs 20 lakh on Bharti Enterprises promoted life and non-life insurance ventures for not informing changes in ownership pattern. Both Bharti Axa Life Insurance Company and Bharti Axa General Insurance Company has been asked to pay a penalty of Rs 10 lakh each.
Bharti Ventures Ltd, one of the promoter entities holding 40 percent shareholding in the Bharti Axa Life Insurance Company, was owned to the extent of 99 percent by a partnership firm Bharti Enterprises, IRDA said in an order.
However, Bharti Enterprises was converted into Bharti Enterprises (Holding) Private Limited with effect from January 8, 2010.
“This change in the status of your promoter entity Bharti Enterprises from a partnership firm to a private limited company had conferred upon it the status of a subsidiary company in terms of Section 4 of the Companies Act, 1956,” the order said.
The restructuring was found to be in violation of the relevant provisions of the Registration Regulations. Besides, the information related to these material changes in the ownership pattern of the promoter entity was not furnished by the company, the order said.
Thus, a penalty of Rs 10 lakh is imposed on Bharti Axa Life Insurance Company, it said, adding, the penalty amount shall be paid within a period of 15 days from the date of receipt of this order.
The insurer submitted that the non-compliances were committed inadvertently and hence the same may be condoned, it added.
Bharti Axa Life Insurance could not be reached for a response.
The order further noted that the effect of non-compliance by any insurer of any regulatory mandate, issued in the interest of the orderly growth of the insurance business, is likely to jeopardise the regulation and development of the business. It would in turn impact the interests of the policyholders.
On similar grounds, the non-life insurance firm, promoted by the mobile operator, Bharti Axa General Insurance Company was also imposed Rs 10 lakh penalty.
Bharti Axa Life started its operation in July 2006 while the Bharti Axa General Insurance was incorporated in June, 2008.