Mumbai:
Changing its earlier stand, the insurance regulator Irdai has decided to talk to the administrator of insolvent Dewan Housing Finance Corp Ltd (DHFL) to frame its action plans on the two of its insurance companies, DHFL Pramerica Life and DHFL General Insurance).
“Yes, we have taken note o the new situation for the DHFL and its possible implications for its two insurance subsidiaries, We have now decided to talk to the newly appointed administrator of DHFL to know about the financial status of the promoters of the insurance companies and take appropriate action to protect the policy holders's interest of two of its insurance subsidiaries,'' said a top official of the IRDAI while interacting with the Asia Insurance Post.
The Wadhawan family, DHFL's promoters, and a group entity own a stake of over 39 percent in DHFL.
Earlier in July,the IRDAI chairman S C Khuntia said the life and general insurance subsidiaries of cash strapped mortgage lender DHFL are safe and have adequate solvency.
"The insurance companies (of DHFL) are safe. I don't see any problem in the insurance companies. We monitor the performance and their solvency is adequate and there is nothing to worry," Khuntia had said.
Khuntia said that as part of their routine inspection of the insurer's records, the regulator did not find any financial constraints.
Insurers are required to hold a solvency of 150 percent at all times.
In the life insurance business, DHFL has a joint venture with Pramerica where the latter holds 49 percent stake. In general insurance, DHFL holds 100 percent in the entity.
A fortnight back, the RBI had superseded the debt-laden DHFL’s board by appointing an administrator R. Subramaniakumar.
It had also said it would refer the mortgage lender to the National Company Law Tribunal (NCLT).
Subramaniakumar, the former managing director and chief executive of Indian Overseas Bank,will manage DHFL’s affairs once it is admitted to the NCLT under the revised Insolvency and Bankruptcy Code (IBC) for financial service providers.
The RBI had also appointed advisory committee—comprising Rajiv Lall, non-executive chairman, IDFC First Bank Ltd, N.S. Kannan, managing director and CEO at ICICI Prudential Life Insurance Co. Ltd, and N.S. Venkatesh, chief executive of the Association of Mutual Funds in India—will work closely with DHFL administrator R. Subramaniakumar.