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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance

A foreign insurer domiciled in Country X carries on insurance business in India. Indian insurers in Country X must keep deposits in Country X, a requirement not imposed on Country X insurers under the Insurance Act, 1938. If the Central Government is satisfied that this requirement exists, what does the Act provide?

The Central Government shall, once satisfied that the special requirement exists, notify in the Official Gazette that the same or a similar requirement be imposed on insurers of that country as a condition of doing insurance business in India. This is reciprocal disability under section 62.

  1. AIt must prohibit the foreign insurer from doing business in India
  2. BIt shall by Gazette notification direct the same or a similar requirement on insurers of Country X as a condition of carrying on business in IndiaCorrect
  3. CIt may ask the Authority to waive the requirement for reciprocity
  4. DIt must wait for Country X to repeal its requirement

Explanation

Section 62 says the Central Government shall, if satisfied of the special requirement, notify that the same or a similar requirement be imposed on insurers of that country. It does not ban the insurer, and the word is 'shall'.

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