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CMA Final · Risk Management in Banking and Insurance · Introduction to Insurance Business

Under Section 2C of the Insurance Act, 1938 (as amended), which of the following entities is among those permitted to carry on a class of insurance business in India?

A public company is permitted. Section 2C allows only public companies, co-operative societies, statutory bodies created by Parliament and foreign re-insurers operating through a branch exclusively for re-insurance. Private companies, partnerships and trusts cannot carry on insurance business, regardless of their size or capital.

  1. AA private limited company with a paid-up capital of Rs 500 crore
  2. BA partnership firm of chartered accountants
  3. CA public companyCorrect
  4. DA registered trust formed for charitable purposes

Explanation

Section 2C(1) permits only a public company, a registered co-operative society, a statutory body established by an Act of Parliament, or a foreign re-insurer with an exclusive re-insurance branch in India. A private limited company is not on the list, however large its capital, so the first option is wrong. Partnerships and trusts are also excluded.

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