Question

In 1993, the Central Government formed Malhotra Committee to bring reforms in the insurance sector. Which of the following statements is NOT true from that context?

• A. R.N. Malhotra, who was the ex-governor of R.B.I, submitted the report in 1994.
• B. Government stake in the insurance companies must be brought down to .
• C. Government should take over the holdings of GIC and its subsidiaries to permit them independently.
• D. The government should cancel to pay premium to insurance companies on behalf of its employees.
• E. No company should deal with both insurance and non-insurance services through a single entity.

Answer 1

The correct option is D The government should cancel to pay premium to insurance companies on behalf of its employees.

A committee was set up in 1993 under the chairmanship of R.N. Malhotra, former Governor of the Reserve Bank of India, to make recommendations for reforms in the insurance sector. The Malhotra Committee recommended introduction of a concept of “professionalisation” in the insurance sector to make out a strong case for paving the way for foreign capital.

In its report submitted in 1994, the committee recommended, that:

• Private players be included in the insurance sector.
• Foreign companies be allowed to enter the insurance sector, preferably through joint ventures with Indian partners.
• The Insurance Regulatory and Development Authority (IRDA) be constituted as an autonomous body to regulate and develop the insurance sector.