The limit on cash payments of insurance premia may be reset lower than the current Rs 50,000.
The finance ministry has communicated to the Insurance Regulatory and Development Authority (IRDA) and Life Insurance Council, among others, that a committee will examine the “threshold for payment of insurance premium by cash,” and also payment of premiums by multiple demand drafts.
“There is no threshold limit that has been proposed and the discussions are going on,” said IRDA Chairman J Hari Narayan. “The move is aimed at working in line with the international norms on anti money laundering.”
Insurance industry experts say most individuals in semi-urban and rural areas pay their premia in cash. “Even the current limit of Rs 50,000 falls short as most of the rural clients only pay in cash,” said SB Mathur, secretary general, Life Insurance Council.
“A lot of people pay their premiums through two or more demand drafts of less than Rs 50,000 and that may be the reason for this move,” said an official at an insurance company.
As already reported by HT, the ministry is also considering bringing down the threshold of PAN requirement for payment of insurance premium above Rs 10,000 per annum.