Industrial development and

regulation act 1951

trai & irda

Presented by:
Mohd.Arish
Shakur Ansari
Chandann Prasad
 Content
qIntroduction
qObjectives of IDR
qFunctions
qInsurance Authority Regulation Act
1999
q
q
q
q
q
q
 Introduction
q Industrial licensing became a part of industrial
economy of India with the passing of industries
(development & regulation Act), 1951.
q This Act came into effect on May 8,1952
q The conceptual and legal framework for small scale
and ancillary industrial undertakings is derived
from the IDR Act, 1951.
q The Industries (Development and Regulation) Act
provides the conceptual and legal framework for
industrial development and industries in India.
q It is briefly known as the IDR Act. The act was
enacted in 1951 and a number of amendments
have been made in the Act.
 Objectives
q To implement the industrial policy.


q To ensure regulation and development of important

industries.


q To ensure planning and future development of new

undertakings.
q
 Functions
q It deals with registration of industrial undertaking
with proper capacity.
q Revocation of registration of industry because of
misrepresentation of facts.
q Licensing of new industrial undertaking or
producing new articles.
q To specify the requirements which shall be followed
by small scale industries.
q Promoting industrial economy and easing the
problem of unemployment.
q Prohibiting the industrial undertaking from
resorting to any Act that reduces its economic
values.
q
 Definition of IRDA
q Insurance is pooling of risks. In contract of
insurance ,the insurer (insurance company)
agree/undertakes, in consideration of a sum of
money (premium) , to make good the loss
suffered by the insured against a specified risk
such as fire , accident etc or any contingency.

 History of IRDA
q Methods of transferring or distributing risk were
practiced by Chinese and Babylonian traders as
long ago as the 3rd and 2nd millennia BC.
q The Greeks and Romans introduced the origins of
health and life insurance c. 600 AD.
q India:- First Indian insurance company was Calcutta
Insurance Company which setup in 1798
exclusively for Europeans. The Bombay Life
Assurance Society formed in 1870 Insured
Indians first time.
q Indian life assurance companies act ,1912 was first
statutory act to regulate life business.
q In 1928 the Indian insurance companies act
enacted
q In 1938 insurance act amended to consolidate
legislation and effective control over the
q1 9 th Ja n . 1 9 5 6 LIC is fo rm e d b y a b so rb in g 1 5 4
In d ia n , 1 6 n o n - In d ia n in su re r a n d 7 5 p ro vid e n t
soGci
q IeC tiwe as.s In co rp o ra te d a s a co m p a n y in Ye a r 1 9 7 1 .
In 1 9 7 2 G e n e ra l In su ra n ce B u sin e ss( N a tio n a liza tio n )
A ct p a sse d w ith e ffe ct fro m 1 st Jan 1973 GIC is formed
by amalgamation of 107 insurer and 4 company formed
named as…
qNational Insurance Co. Ltd.
qThe New India Assurance Co. Ltd.
qThe Oriental Insurance Co. Ltd.
qThe United India insurance co. Ltd.
qIn Dec. 2000 subsidiaries of GIC were restructured
as independent company. And in July 2002 parliament
passed a bill of De-linking of four subsidiaries of
GIC.
 IRDA

In 1993 Government setup a committee under



chairmanship of RN Malhotra ,former Governor of

RBI for reforms in Insurance sector.
Ø Recommendations are :-


q IRDA was constituted as an autonomous body to

regulate and develop the insurance industry.


q Foreign companies are allowed up to 26% of paid

up capital and can operate with an Indian
company.


 MEMBER OF IRDA

q
q The Authority is a ten member team consisting of

    (a)    a Chairman;

    (b)    five whole-time members;
    (c)    four part-time members

 Duties, Powers and
Functions of IRDA
qTo regulate, promote and ensure orderly
growth of the insurance business and re-
insurance business.
qIssue to the applicant a certificate of
registration, renew, modify, withdraw,
suspend or cancel such registration .
qProtection of the interests of the policy holders
in matters concerning assigning of policy,
nomination by policy holders, insurable
interest, settlement of insurance claim,
surrender value of policy and other terms and
conditions of contracts of insurance;
 Cont……
q Specifying requisite qualifications, code of conduct
and practical training for intermediary or
insurance intermediaries and agents.
q Specifying the code of conduct for surveyors and
loss assessors.
q Promoting efficiency in the conduct of insurance
business.
Levying fees and other charges for carrying out
the purposes of this Act
q Calling for information from, undertaking inspection
of, conducting enquiries and investigations
including audit of the insurers, intermediaries.
q Control and regulation of the rates, advantages,
terms and conditions that may be offered by
insurers in respect of general insurance
business .

 Cont……
q Specifying the form and manner in which books of
account shall be maintained and statement of
accounts shall be rendered by insurers and other
insurance intermediaries.
q Regulating investment of funds by insurance
companies.
q Regulating maintenance of margin of solvency
q Adjudication of disputes between insurers and
intermediaries or insurance intermediaries.

 Registration under IRDA
Ø The application accompanied by:-
q A certified copy of memorandum and article of
association.
q Name, address and occupation of Directors.
q A statement of the classes of insurance business
done/to be done along with a statement of
deposits with the Reserve Bank of India.
q For life business , a sum equivalent to 1% of total
gross premium not exceeding 10 crore written in
India in any Financial year.
q For General business 3% of total gross premium
not exceeding 10 crore.
q
q
 Cont……
q Reinsurance business Rs.20 crore; Rs.100,000.
q For cooperative life insurance business / assurance
companies should be Rs.2 lacks.
q A declaration verified by an affidavit by the principal
officer of the insurer that the requirement of paid up
capital (Rs. 100 crore and Rs.200 crore for life/general
and reinsurance business, respectively) Rs. 250 crore
for reinsurance business or working capital.
q A certified copy of the Published prospectus if any and,
q Standard policy forms of the insurer and statements of
the insurer and statements of the assured rates,
advantages, terms and conditions to be offered in
connection with insurance policies, together with a
certificate in connection with life business by an
actuary.
q
 Cancelation of Registration
q He fails to comply with the requirement of deposit
with the RBI.
q He fails to comply with the requirement relating to
sufficiency of assets(assets-liabilities)
q The whole of his deposit has been refunded to
him on court order when he cease to carry on
business and all liabilities has been
satisfied/provided for.
q He defaults in complying with or contravenes any
requirement of insurance act/any rule/order
made or direction issued there under,
q The IRDA has reason to believe that any claim are
unpaid for 3 month after final court order in
India.
q He carries on any other business,
 Insurance Business in
Rural/Social sector

For all new life insurer:-( percentage of total



insurance)
q First year-7%
q Second year-9%
q Third year-12%
q Fourth year-14%
q Fifth year-16%
q Sixth year-18%
q
 For general insurer….

q First year- 2%
q Second year- 3%
q Third year-5%
q Fourth year- 5% so on…
q All insurers are obliged to issue 5,7,10,15,20,and
25 thousand lives in first six years respectively.
q
q
 LICENCING OF INSURANCE
AGENTS
An insurance agent is a licensed agent with


IRDA. For getting license an agent has to pay Rs

250
ØEligibility:- The agent should not
q Minor
q Unsound mind
q Guilty of criminal misappropriation /breach of
trust/forgery
Ø Have not been found in the course of
qAny judicial proceeding relating to any
insurance policy/winding up of an insurance
company
qGuilty of knowingly participated in
 CURRENT NEWS:
q India’s insurance sector is expected to grow 17% in
2008-09 fiscal year if the economy expands at
7.6%, Insurance Regulatory and Development
Authority (IRDA) chairman J. Hari Narayan.
q The federal cabinet approved changes to insurance
laws and proposed raising the foreign investment
limit to 49% from the present 26%.
qLife insurers grew their business by 23.3% to
Rs930 billion in 2007-08 fiscal year, while
general insurers posted growth of about 14%
in premium income to Rs298 billion,
according to IRDA data.
qIf an agent left his job then it is the
responsibility of insurance company to help
customer and manage all future assistance.

 CONT….
q According to K N Bhandari, the Secretary General
of General Insurance Council, India's general
insurance sector growth @ 18% rate in 2008. In
2007 it was 13%.
q Present market value of the GIS is Rs 30,000-
crore& Penetration level of the Indian insurance
sector is 0.65 %. 

TELECOM REGULATORY
AUTHORITY OF INDIA,
1997

This act was amended to provide for the

Establishment of the
Telecom Regulatory Authority of India to regulate the
telecommunication and services, to protect the
interests of service providers and consumers of the
telecom sector, to promote and ensure orderly growth
of the telecom sector, and for matters connected
therewith or incidental thereto.
 Establishment and incorporation
of Authority:


v Central government establish TRAI for the purpose of

this act.
v Body corporate having perpetual succession and a
common seal, with power subject to the provisions of
this act , to acquire , hold and dispose of property .
v The authority shall consist of a chairperson, and not
less than two but not exceeding six members.
v The head office shall be at New Delhi.

Qualifications for appointment of
chairperson and
other members:

v The chairperson shall be a person who is or has been a

judge of supreme court or who is or has been a chief
justice of a high court.
v A member shall be a person who has special
knowledge of any professional experience, in
telecommunication, industry, finance, accountancy,
law, management and consumer affairs.
 Term of office & conditions of service:
v Person does not have any such financial or other
interest as is likely to affect prejudicially his functions
as such member.
v The chairperson shall hold office for a term of five
years .
v A member shall hold office for a period of five years or
until he attains the age of sixty five years , whichever
is earlier.
v
v
v
v The employee of the government on his selection as
shall have to retire from service before joining as a
member.
v The salary, allowances and other conditions of service
of chairperson and other members shall be such as
may be prescribed.


 Powers of chairperson and vice

chairperson:
v The chairperson shall have powers of general
superintendence and directions in the conduct of
the affairs of the authority and presiding over the
meeting.
v Central government may appoint a vice chairperson
 Removal and suspension of member
from office:
v
v
v
v A person who has been adjudged an insolvent or has been
convicted of an offence.
v Person who has become physically or mentally incapable
of acting as a member.
v Person who has acquired such financial or other interest as
is likely to affect prejudicially his function as a member.
 Meetings:
v Chairperson or vice chairperson or any other member
chosen by the members present from amongst
themselves at the meeting shall preside at the meeting.
v All questions which come up before any meeting of the
authority shall be decided by a majority vote of the
members present.
v The authority may make regulations for the transaction of
business at its meetings.
 Functions of TRAI:
q
q
q
q To recommend the need and timing for introduction of new
service provider.
q To recommend the terms and conditions of licence to a
service provider.
q To ensure compliance of terms and conditions of licence.
q Recommend revocation of licence for non compliance of
terms and conditions of licence.
q Facilitate competition and promote efficiency in the
operation of telecommunication services.
q Protect the interest of the consumers of telecommunication
service.
q Monitor the quality of service and conduct the periodical
survey.
q Inspect the equipment used in the network and
recommend the type of equipment to be used.
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