Page 5 - Insurance Times December 2019

General Insurance

News

ISRO likely to purchase Centre to bring legislation on raising insurance cover on
bank deposits to above Rs 1 lakh
first insurance policy for
Finance Minister Nirmala Sitharaman has recently stated that the government
satellite will bring legislations on raising insurance cover on bank
According to the information from deposits from the current Rs 1 lakh and regulating multi-
sources, the state cooperative banks amidst a crisis in PMC Bank af-
Indian Space fecting lakhs of depositors.
Res e a r c h These legislations will be brought during the Winter Ses-
Organisation sion of Parliament, the minister further informed. "Work
(ISRO) is ey- is on and we shall go to the Cabinet for approval to in-
ing to buy its first insurance policy troduce a legislation in winter session. The legislation will amend the neces-
for a domestically launched space sary Acts and the laws to make sure that banking functions undertaken by co-
satellite, the first since it began operatives sector will be brought under the Banking Regulation Act for com-
launching satellites in 1975. plying with prudential norms," she added.
There can be two factors which are She said that unless the prudential norms are applied, many of the things that
expected to have been influencing are emerging in the light of the Punjab and Maharashtra Cooperative (PMC)
ISRO to begin buying satellite insur- Bank crisis will never be addressed and this legislation will ensure that no PMC
ance. Firstly, there is an unexpected like case happens in the future, she added.
setback in Project Chandrayaan-2, In regard to deposit guarantee insurance limit hike, Sitharaman stated it may
which cost nearly INR10 billion not be part of cooperative bank legislation but part of some other laws.
(US$139.4 million). Secondly, there
is the success of ISRO’s Mars mis- PSU general insurers seek capital infusion from govt.
sion, which brought down reinsur- ahead of merger
ance rates for Indian space explora-
Ahead of the merger, the public sector general insurance companies have
tion activities.
sought capital fund infusion from the central
While ISRO has not insured launches government before the amalgamation, as per
conducted on Indian soil, it has typi- the sources informed. It has been announced by
cally insured launches done in part- the government that National Insurance, United
nership with other countries, such India Insurance and Oriental Insurance will be
as Russia and the US. New India merged in February 2018.
Assurance and other state-owned The public sector general insurance firms have
insurers were typically those tapped highlighted the need for immediate recapitaliza-
to provide cover for these projects, tion in order to maintain the regulatory solvency ratio and wipe out losses
with reinsurance from the interna- before the merger. The general insurers have sought at least Rs. 20-30 billion
tional market. in each of the companies while the total collection requirement is around Rs.
120-130 billion.
The Insurance Times, December 2019 5