People's Commission Urged The Government In February To Not Divest Its Stake In LIC
Union Finance Minister Nirmala Sitharaman on Monday, in a written reply to the Lok Sabha, informed that LIC’s IPO could have gone ahead without the appointment of the Insurance Regulatory and Development Authority of India (IRDAI) Chairman as well, stating that there is no such requirement under SEBI's regulations. Congress MP in Lok Sabha, Manish Tewari had asked the finance minister about the vacancy on the post of Chairman, IRDAI, for the last eight months.
The finance minister informed that the appointment has been notified on March 11, 2022, to fill up the vacancy that had arisen in the office of the Chairperson, IRDAI, upon completion of the term of the last incumbent. The Government has appointed retired IAS officer and former financial services secretary Debasish Panda as chairman of the IRDAI.
He also asked whether the Peoples’ Commission on Public Sector and Public Services had urged the Union Cabinet Secretary to advise the Cabinet not to divest its stake in LIC. To this, the finance minister replied, “An email dated February 14, 2022, has been received in the Cabinet Secretariat from the People’s Commission on Public Sector and Public Services, expressing apprehension that regulatory oversight has been weakened to facilitate disinvestment in LIC and advising that no action be pursued on LIC disinvestment till a person heads the Authority, on the ground that a headless Authority will be considering the draft Initial Public Offer (IPO) proposal.”
The finance minister further stated, “In this regard, it is pertinent that LIC, in accordance with the provisions of regulation 25 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, filed the draft offer document for the IPO with the Securities and Exchange Board of India (SEBI) on February 12, 2022 and there is no requirement under the said regulations or otherwise for the same to be considered by the Authority.”
The finance minister clarified that under the IRDAI Act, 1999, the powers and functions of the Authority are vested collectively in the collective body of its members. The Act and regulations also provide that the senior-most full-time member of the Authority shall fix the date, time and place of its meeting and approve items of agenda therefor, that any other member chosen by the members present shall preside at its meetings in the absence of the Chairperson, and that vacancies etc. in the Authority shall not invalidate its acts or proceedings.
“Thus, even when there is a vacancy in the office of the Chairperson, the Authority is in position to exercise its powers and discharge its functions in accordance with the applicable law,” Sitharaman stated.
