The Securities and Appellate Tribunal (SAT) has suspended an IRDAI directive for ICICI Prudential to take over the life portfolio of Sahara India, following an appeal lodged by the latter.
The SAT on Monday granted a week for the IRDAI to furnish its reply explaining its decision on Sahara.
The IRDAI took over the administration of Sahara on 12 June, in a first of its kind move in the insurance sector and ordered the company to stop issuing policies on 23 June. Subsequently, the IRDAI shortlisted six life insurers which could take over Sahara's business portfolio, and decided on ICICI Prudential which is also currently the only listed insurer in the country. ICICI Prudential was to have taken over Sahara's portfolio on 31 July.
Fighting back in a statement against the IRDAI's order, Sahara's management said: "Sahara felt that the order was passed with great impunity to benefit a third party and in violation of principles of natural justice. Sahara challenged the action of IRDAI stating that its business was continuously in profit and the company has been in absolute and strict compliance with all regulatory norms/directions issued by IRDAI and that there has not been even a single case of any complaint of non-payment of any claim to any policyholder and though the required solvency margin is only 1.5, Sahara Life has been maintaining a solvency margin of more than 8 which reflects the sound financial health of the company."
Sahara added: "It was unfortunate that IRDAI has stopped Sahara Life from selling new life insurance policies and to underwrite new business and directed ICICI Prudential to take over the existing life insurance business portfolio of Sahara Life. IRDAI had not even framed any scheme, to safeguard the interest of policyholders, which is a statutory requirement before transferring the business to ICICI Prudential. The order was passed in great hurry and there was neither any transparency in the action of IRDAI nor the legal provisions were complied with."
In a previous statement on Sunday, Sahara said that on one hand the IRDAI did not give the insurer permission to expand branches and on the other IRDAI is now alleging that business is not increasing.
“Not even a copy of the administrator’s report was provided to Sahara Life, nor was it granted any opportunity of a hearing on such report, before the IRDAI passed the order of transfer of business to a third entity. The company has never acted in any manner prejudicial to the interests of policyholders. Sahara will pursue its remedy, against such approach of IRDAI, in the Court of Law,” the insurer said.
A senior IRDAI official said that Sahara Life had serious "governance issues" and that the regulator will give their response within a week. The regulator previously said that INR780 million (US$12.2 million) had been siphoned off by Sahara in the name of security deposits. It also said that the promoters of Sahara are no more “fit and proper” persons. The Sahara Group has been hit by financial troubles since its chief Subrata Roy was arrested in 2014 for duping investors.
On the issue of the INR780 million, Sahara said that the money was kept as a security deposit with one entity, Sahara India, which provided furnished, computerised office accommodation in around 150 places. “This security deposit amount is absolutely repayable to Sahara Life,” it said.