CBI has started a probe into alleged undervaluation of penalty to the tune of nearly Rs 17,500 crore on Reliance General Insurance Company Limited by the officials of Insurance Regulatory and Development Authority(Irda) in 2009.
The agency has named Reliance General Insurance Company in its inquiry and “unknown officials” of the Authority, CBI sources here said on Sunday.
“CBI has registered a preliminary enquiry against unknown officials of Insurance Regulatory and Development Authority and a private company on allegations that a penalty of Rs 20 lakh (approximately) was imposed on the said company instead of Rs 17,500 crore for 3.5 lakh instances of violations of Irda guidelines,” CBI spokesperson Kanchan Prasad said.
According to Irda penalty order in 2009, the company had sold 3.5 lakh policies and each policy constituted a violation thereby making company liable for a penalty of Rs 17,500 crore. But only Rs 20 lakh of penalty was actually levied, it said.
The then chairman J Hari Narayan who signed the order has already been quizzed, CBI sources said, adding that they are trying to understand if there was a mala fide or a quid pro quo in the order.
The allegations relate to Reliance Health Care policy which was sent to Irda in 2005 for necessary clearances which was cleared in 2006.
A Reliance General Insurance spokesperson said the allegation that penalties of Rs 17,500 crore could have been imposed in this matter is baseless, unfounded and devoid of any legal foundation.
“The total premium collected under the policies issued more than five years back was Rs 80 crore, against which claims of Rs 140 crore were paid, resulting in huge losses to RGCIL,” the spokesperson said.