Banking Awareness: Expected Interview Topics Insurance and Banking for IBPS and SBI Interviews

Corporate Governance Guidelines for Insurance Companies

Corporate Government guidelines have been rolled out for insurance companies which are effective from 1st April, 2010.The guidelines broadly cover major structural elements of Corporate Governance in insurance companies. According to the same, a minimum lock-in period of 5 years from the date of certificate of commencement of business of an insurer is laid down on the promoters of the insurance company and no transfer of shares of the promoters would be permitted within this period. Guidelines further stipulates that the Board of the insurer should have practices in place for succession planning for the key senior functionaries through a process of proper identification and nurturing of individuals for taking over senior management positions.

Insurance are required to have a minimum of two independent directors on their Board as long as they are unlisted. Where the Chairmen of the Board is non-executive, the Chief Executive Officer should be a whole time director of the Board. Not more than one member of a family or a close relative as defined in the Companies Act or an associate (partner, director etc.,) should be on the Board of an Insurer. Directors of insurance companies have to meet the "fit and proper" criteria. Guidelines further stipulates formation of the following committees mandatory: Audit, investment, Risk Management, Asset Liability Management (in case of Life Insurance companies), Policyholder Protection, Optional committees to be formed are Remuneration, Nomination and Ethics.

Insurance and Banking:

The insurance companies in India are constantly collaborating with the banking institutions on the pattern of foreign countries to impart more efficiency in the entire venture insurance sector. More and more insurance companies are signing MoUs with the Indian banks in order to carry on their marketing activities through the branches of the banks, the prominent Indian banks that have already signed such Memorandum of Understanding (MoUs) include the Vysya Bank, the State Bank of India and the Jammu and Kashmir Bank.

In 2008, its wholly owned subsidiary was opened in Singapore. It also extends assistance for development of infrastructure facilities like housing, rural electrification, water supply, sewerage etc. In addition, it extends resource support to other " financial institutions through subscription to their shares and bonds" etc. In making investments, the major consideration is the protection of the interests of policy holders and the aim is to secure the highest possible yield consistent with the safety of capital. It is the single largest investor in the country. It subscribes to and underwrites the shares, bonds and debentures of various financial corporations and companies and provides term loans.