CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance
Country X requires Indian insurers operating there to keep a special deposit in Country X, a requirement not imposed on Country X insurers operating in India under the Insurance Act, 1938. An insurer domiciled in Country X carries on business in India. 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 is imposed on insurers of that country as a condition of doing business in India. It is mandatory, not discretionary, and needs no cancellation of registration.
- AThe Central Government shall, by notification in the Official Gazette, direct that the same or a similar requirement be imposed on insurers of Country X in IndiaCorrect
- BThe Central Government may, at its discretion, ignore the requirement
- CThe Authority must cancel the registration of the Country X insurer
- DThe Central Government must obtain Parliament's approval before taking any step
Explanation
Under the reciprocal-disability provision, if the Central Government is satisfied that such a special requirement exists, it shall by Official Gazette notification direct that the same or a similar requirement be imposed on that country's insurers in India. The word is 'shall', so it is not discretionary. Cancellation of registration and parliamentary approval are not provided.
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