The Securities Appellate Tribunal (SAT) has pulled up SBI Life Insurance for delaying the matter related to a refund of ₹ 275 crore to policy holders, which the private insurer was directed by the Insurance Regulatory and Development Authority of India (IRDAI) way back in March 2014.
On Friday, the appellate body imposed costs of ₹ 10,000 on SBI Life for dragging the matter for more than two years after having received a reprieve in the form of a stay on the IRDAI order.
The tribunal has posted the matter for hearing on October 31.
In 2015, SAT had granted interim relief to SBI Life by directing IRDAI not to take any coercive action to recover the amount of ₹ 275 crore till the tribunal passes a final order in the matter.
The roots of the matter go back to March 2014 when IRDAI ordered SBI Life to refund ₹ 275.29 crore, which according to the regulator, was the quantum of excess commission collected from holders of Dhanaraksha Plus Limited Premium Paying Term policy.
While the policy had two premium payment options — single premium and two-year premium paying plan — the regulator found that the corporate agents of SBI Life that mostly included State Bank of India and its associate banks did not reveal to the policy holders the availability of single premium option.
The share of commission is less in a single premium option when compared to two-year premium plan.
SBI Life Insurance is a 74:26 joint venture between State Bank of India (SBI) and BNP Paribas Cardif of France. Incidentally, the insurance company is in the midst of its initial public offer (IPO) and Friday is the last day for submitting bids for the public issue.
Some policyholders had also moved Allahabad high court that directed IRDAI to "examine the policies with an object as to whether terms have any hidden agenda or terms and conditions and charges which are detrimental to the policyholders."
"If IRDAI finds that any of the policies are not in terms with its guidelines, or have hidden term and charges have any object to deceive the policyholder, it will direct the SBI Life to discontinue such policies and to return the entire amount invested to the investors. In such case it will be open to the Central Government to initiate prosecution against the management of SBI Life in accordance with the law," stated the order.
Senior advocate Janak Dwarkadas along with DMD Advocates appeared for SBI Life on Friday while IRDAI is being represented by Suvan Law Advisors along with senior counsel Kevic Setalwad.
