The Insurance Regulatory and Development Authority (IRDA) has imposed a fine of Rs 70,00,000 on SBI Life Insurance company for paying around Rs 204 crore to eight of its corporate agents and six master policyholders, far in excess of the stipulated levels.
In an order on Friday, IRDA asked SBI Life Insurance to pay the penalty within 15 days.
SBI Life Insurance is a 74:26 joint venture between State Bank of India (SBI) and BNP Paribas Cardif.
According to IRDA, payments were made by SBI Life in violation of laid down guidelines.
The company argued that the payments were reimbursement of administrative expenses incurred by master policyholders. But IRDA termed it as untenable.
IRDA had issued Group Insurance Guidelines under Section 34 of the Insurance Act stipulating the maximum percentage of commission payable to an agent in respect of group insurance policies.
Further, it had said, no payment will be made towards management expenses, document expenses, profit commission, bulk discount or payment of any other description to the agent or group organiser or manager or a master policyholder.
The payments were received from SBI Life Insurance by the agents and master policyholders between 2005-2010.
The eight corporate agents (associates of State Bank of India) and the six master policyholders are:
State Bank of India Rs 127 crore
State Bank of Bikaner and Jaipur Rs 8.44 crore
State Bank of Hyderabad Rs 13.25 crore
State Bank of Indore Rs 3.69 crore
State Bank of Mysore Rs 8.28 crore
State Bank of Patiala Rs 5.56 crore
State Bank of Saurashtra Rs 3.31 crore
State Bank of Tranvancore Rs 16.12 crore
Union Bank of India Rs 6.13 crore
United Bank of India Rs 3.04 crore
Sundaram Home Finance Rs 1.56 crore
Dewan Housing Finance Corp Rs 4.26 crore
The Federal Bank Rs 3.34 crore
Kerala Transport Development Finance Corporation Rs 316,029