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IRDA finds irregularities in insurance operations of SKS Microfinance

The insurance regulator had conducted inspections in the micro-finance institution for a long time.

May 23, 2012 5:17 IST | India Infoline News Service
It has been quoted in media that IRDA (Insurance Regulatory and Development Authority) has found many irregularities in the insurance operations of SKS Microfinance Ltd—a non-banking financial company.

The insurance regulator had conducted inspections in the micro-finance institution for a long time. The irregularities included receiving the cheques of death claims from its insurers on its name, which is illegal.

Hyderabad-based SKS claims its mission is to eradicate poverty by providing financial services to the poor. The company operates across these 19 states of India. It deals with about 10 insurers in life and non-life for various purposes including distribution of products.

But according to IRDA, the micro-finance institution had collected higher commissions than permitted by the regulator while selling the insurance policies.
SKS earned Rs. 3.7 billion in FY11-12—which is a considerable part of its other income—from distribution of its insurance policies.

The regulator has asked SKS Microfinance to give an explanation about the irregularities indicated in its insurance operations.  
Generally, IRDA gives a personal hearing to any company that violates norms before deciding on a penal action.

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