Insurance regulator IRDA has slapped a fine of Rs 20 lakh on Bharti Enterprises-promoted Bharti Axa Life Insurance Company and Bharti Axa General Insurance Company for not disclosing changes in the ownership pattern.
Both Bharti Axa Life Insurance Company and Bharti Axa General Insurance Company have been asked to pay a penalty of Rs 10 lakh each.
However, Bharti AXA General Insurance MD and CEO Amarnath Ananthanarayanan said, "No transfer of shareholding or shares has taken place in our general insurance and life insurance joint ventures. We will take up the matter with the IRDA and present the facts. We are hopeful that the regulator will reconsider its decision to levy the penalty."
From the Bharti AXA General Insurance standpoint, it is business as usual. This does not in anyway affect the stability and daily working of the company, he added.
Bharti Ventures Ltd, one of the promoter entities holding a 40 per cent stake in Bharti Axa Life Insurance Company, was owned to the extent of 99 per cent by partnership firm Bharti Enterprises, IRDA said in an order.
However, Bharti Enterprises was converted into Bharti Enterprises (Holding) Private Limited with effect from January 8, 2010.
"This change in the status of your promoter entity, Bharti Enterprises, from a partnership firm to a private limited company had conferred upon it the status of a subsidiary company in terms of Section 4 of the Companies Act, 1956," the order said.
The restructuring was found to be in violation of the relevant provisions of the Registration Regulations. Besides, the information related to these material changes in the ownership pattern of the promoter entity were not furnished by the company, the order said.
Thus, a penalty of Rs 10 lakh is imposed on Bharti Axa Life Insurance Company, it said, adding that the penalty amount shall be paid within a period of 15 days from the date of receipt of the order.
The insurer submitted that the non-compliances were committed inadvertently and hence may be condoned.
The order further noted that the effect of non-compliance by any insurer of any regulatory mandate, issued in the interest of the orderly growth of the insurance business, is likely to jeopardise the regulation and development of the business. It would in turn impact the interests of the policyholders.
On similar grounds, the non-life insurance firm promoted by the mobile operator, Bharti Axa General Insurance Company, was also slapped with a Rs 10 lakh penalty.
Bharti Axa Life started its operations in July, 2006, while Bharti Axa General Insurance was incorporated in June, 2008.