Non-banking financial company (NBFC) Magma Fincorp’s plans to foray into non-life insurance space may take longer than expected. The Insurance Regulatory and Development Authority (Irda) has sought more information on the financial statement of 2009-10 submitted by the NBFC.
The application for R1 licence was sent back for further details this week. There are three stages of approval required for getting a licence for an insurance company. R1 is the preliminary approval given by Irda wherein the regulator evaluates the promoters. In the second stage R2, Irda looks into the business model of the company and in the third R3, it looks at the formation of the company.
"We have sought more information on the financial statement submitted by the company for the last financial year. It does not carry all relevant information required to process an application for licence," said a senior Irda official.
Chief Executive Officer (CEO) designate Swaraj Krishnan said: "We are hopeful of getting the regulatory approval." The company had appointed the CEO in January this year and expected to roll-out the business in this financial year.
Magma Magma Fincorp had tied-up with HDI-Gerling International Holding AG of Germany in July 2009 to foray into non-life insurance.
The joint venture company between Magma Fincorp, its associate company Celica Developers, and the German insurer was named as Magma HDI General Insurance Company. In the joint venture formed, Magma Fincorp and Celica Developers holds a 37 per cent stake each, while HDI Gerling holds 26 per cent. The company had earlier said that initial paid-up capital of the company would be Rs 110 crore.
The company would file its R1 application after two months with all the information sought by the regulator, he added.
There are 23 non-life insurance players, including four public sector companies in the country. The last company which received a nod from Irda was L&T General Insurance, non-life insurance arm of engineering and construction major Larsen and Toubro (L&T). This is the second standalone non-life insurance company after Reliance General.
Reliance General and Royal Sundaram Alliance have submitted the merger proposal with the insurance regulator. In the meantime, Irda is working on the mergers and acquisition guidelines.