On May 22, 2020 Insurance Regulatory and Development Authority of India(IRDAI) has approved the proposal of the state owned lender Union Bank of India-UBI(which holds 25.1% stake in Star Union Dai-Chi Life) to continue with its 30% holding in IndiaFirst Life Insurance.
- The holding is with condition that- the lender will not exercise management or any control over the insurer’s management & in appointing separate directors on the board or IndiaFirst and Star Union Dai-Chi and in case of any conflict in the decision will be taken up with the Reserve Bank of India(competent authority)
Major Highlights
i.The authority will permit UBI and insurers promoted by it a period of one year to hold existing shares of the Andhra Bank in IndiaFirst Life Insurance for a period of 12 months following the merger(merger of UBI, Corporation bank & Andhra bank) and reorganize the arrangements to remove conflict of interest issues which have arisen from the merger.
ii.As per IRDAI’s guidelines, there is a restriction that a lender must not own more than 10% stake in two insurance companies & cannot exercise management control in IndiaFirst and have the same directors for insurers promoted by the bank. The bank was expected to remove the entire stake or a considerable part of IndiaFirst Life Insurance as per IRDAI’s guidelines
iii.The bank received a promoter stake in IndiaFirst Life Insurance in April, which was previously held by Andhra Bank following its ‘mega’ merger on April 1 with Andhra Bank and Corporation Bank.
Key Points
As of now, Bank of Baroda is the biggest shareholder in India First Life Insurance with 44% stake. Camel Point Investments, a Mauritius based company owned by private equity investor Warburg Pincus has the remaining 26% share.
Background
UBI has sent a proposal to seek permission to continue with its existing holding in IndiaFirst Insurance and Star Union Dai-Chi for an extended period of at least one year on March 7.
About UBI:
Headquarters– Mumbai, Maharashtra
Chairman & Part time Non-Official Director- Kewal Handa
Managing Director(MD) & Chief Executive Officer(CEO)– Rajkiran Rai G.
About IndiaFirst Life Insurance:
Headquarters– Mumbai, Maharashtra
MD & CEO– RM Vishakha
About IRDAI:
Headquarters– Hyderabad, Telangana
Chairman– Subhash Chandra Khuntia
