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This article puts stress on the impact of liberalisation on the Indian insurance corporation specifically the LIC. Insurance protects a businessman from sudden damage or loss of assets. Such events are unpredictable and may lead to a major setback for any businessman. The process of liberalisation took almost a century to take its modern structure. Life Insurance Corporation of India popularly recognized by the abbreviation – LIC was established in September 1956 under the guidance of the Indian Government. It included a total of 170 insurers (both national and international) and also 75 provident funds. The sole purpose was to generate awareness and improve the feasibility of life insurance at an affordable rate for all legal entities across the country. Due to a lack of awareness, we noticed the low penetrative nature of this life insurance plan. Malhotra Committee was established in 1993 to scrutinize the pre-existing regulatory measures for drafting new reforms. Thus private companies set their foot in the Indian insurance sector. In March 2000 the IRDA bill was finally approved by the Indian Parliament which made the entry provisions of international market players more flexible. The healthy competition began when the IRDA commission allowed 26% foreign incorporation in the insurance industry.
Impact of Liberalisation
The occupied market in the insurance sector provided easy access to security plans. People were more educated on strategic financial planning. Premium rates dropped to increase affordability and cope with the cutthroat competition in the market. The most crucial impact of liberalisation was that the range of products increased remarkably which were sold out through numerous distribution channels. Many job opportunities popped up in this industrial sector. Apart from these multiple benefits, there are many downsides of the liberalisation which particularly affected the LIC.
Transfer of shares
The transfer of shares is nothing but a reallocation of assets. The owner may achieve assets in physical form or may be entitled as a proprietor. Both conditions are also prevalent at the same time in the transfer of shares.
The transfer of shares is however different from the transmission of shares. The latter modality involves jurisdiction that hands over all the assets of a deceased owner to his/her nominee. While in the transfer of shares we witness voluntary action of the owner who transfers the shares of a company to someone through a legal contract. Thus it is an intentional act of the shareholder. There is an associated stamp duty that the transferor needs to pay. It depends on the value of the shares in the market. Public companies offer shares that can be bought readily unless there is any valid reason for which the corporation wants to retain its shares. Transfer of shares from the private corporate sector is not available for sale except under certain circumstances.
Janakiraman Committee Report
Janakiraman Committee led by R. Janakiraman worked towards improving the existing security systems dealing with the transfer of funds. The Committee was formed in 1992 after the infamous scam involving the share market and PSU units. The council strived to design an ideal security system in the Janakiraman Committee report that was enacted in October1992. The report called for the formation of a separate Supervisory Board to monitor the financial activities. The Reserve Bank of India provided sufficient liberty to the members so that the regulatory body can track the improvements in the new organized and regulated transaction models of the PSU bonds, banks, and other financial institutions. In a nutshell, the report made us aware of the contemporary prohibited repo transactions which were still active in the Indian market through the assistance of several financial institutions.
Case study on venture capital financing in India
Venture capital financing involves investments that are furnished to budding companies in the market. The investors must be convinced in the first place by the company’s business model. If they think that the company can garner profit in the long term then only they put their money.
Investing in venture capital involves a high-risk factor. A case study on venture capital financing in India has been done since its inception inspired by western culture. HelionVenture Partners supports budding businessmen in India to resolve complex business issues. The company has its headquarters in Mauritius and they provide financial help to entrepreneurs. They invest up to $10 million. They have invested in e-commerce, retail outlets, travel companies, healthcare, software companies, and many more.
Conclusion
Insurance policy companies grew in India over the past hundred years. Provisions introduced by the Malhotra Committee instigated foreign insurance companies to tie up with local businesses. Affordability and awareness increased together which boosted the sales of such policies. Then venture capital financing also started to arrive in India which benefited the economy of our nation.
