A.

Money
B. Banking
C. SEBI-Sharemarket, Financial Market,
Companies Act and Corporate
Governance -> Quiz
D. Next: Insurance, Pension, fin. Inclusion

SEBI-walla handout
Quiz@9:30PM
 Insurance Pays premium e.g. Rs.6000/- per
year
Policy

Insurer / Insured /
Underwriter Client
Pays Rs. 1 Crore if client dies. “Law of probability”- all
will not die at same time.
 • Debt instrument.
Insurance Policy • Social device / legal contract
• Against eventualities of death /
damage
Life /
Non-Life
(General)

Insurer /
Insured / Client
Underwriter
 • Good faith, hide nothing.
Uberrima
fides • Already HIV/cancer and buying health
insurance with fake medical certificates.
• Only to extend of “REAL” loss, not
imaginary.
Indemnity • ₹15 lakh House burnt, couldn’t give CAT
exam= give ₹50 cr rupees of imaginary
IIM-package.
Not important
• Insurer can Recover from negligent 3rd for prelims but
Subrogation party. fundamentals
• faulty boiler caused factory explosion?
useful in GSM4
 •Direct loss link.
Causa •Film Fan buying life insurance
proxima for Amitabh. (that’s ‘speculation
/ betting’)
•If “risk-x” not happen, client
remains in same position, “risk-
Insurable x” happens client in bad Not important
interest position. for prelims but
•e.g. can’t take ‘insurance’ on “if fundamentals
I don’t win lottery ticket”. useful in GSM4
Presidency Banks Insurance
• 1818: Oriental life (1st)
•1806-45->1921->55
Which was
Targets
Target first…KBC-GK
• foreign widows. Indians
•Merchants, foreigners charged extra premium “more
likely to die”
Swadeshi Swadeshi
•Allahabad (1865), • 1870: Bombay Mutual life
PNB (1894) assurance. [no extra premium
for being “Indian”]
 1912:
1913 •Life insurance
companies act
•Companies Act

1934 1938:
•RBI Act •Insurance Act
1949
Aftermath of great depression and
•Banking regulation Act collapse of companies
1948
•RBI nationalized
1956 (Corporation)
1955
•LIC Act took over ~245 private
•Imperial Bank->SBI insurance co.

Private Banks 1972 (Corporation)

•1969 (14 banks) •GIC & its four subsidiaries took
•1980 (6 banks) over ~107 General Insurance
Cos.
Before independence, 1. Private owners’ shares
owned by pvt parties. transferred to Govt of India. =
So they were private banks “Nationalized Banks”
2. Public Sector Bank = Govt is the
majority shareholder.
 1. Private owners’ shares transferred to
Before independence, Govt of India. = “Nationalized Banks”
owned by pvt parties. 2. Public Sector Bank = Govt is majority
So they were private banks shareholder.

This was never a private owned

banks. Directly, govt setup
with public money in 2013.
So, “Public Sector Bank”, but
not “Nationalized Bank”.
 Yes it’s a bank, but
have to obtain
•Allow •Allow pvt separate license from
IRDAI for insurance
private insurance
banks… companies.
Narsimhan I Malhotra
(1991) & II Committee 1993
(1998) [RBI Gov] [IAS, RBI Gov.]

•CRR, SLR on deposits •Investment Pattern, Solvency
•BASEL-III norms capital… Margin. E.g. They must invest
minimum “x%” of premium
in G-Sec, they can’t invest
more than “y%” of premium
in pvt companies
shares/bonds etc. & so on..
Exact norms not imp.
RBI IRDAI
Insurance / Pension
sector qs: don’t come
each year.
They are usually
confined to govt
schemes, so we need
not spend too much
mental energy here.

• PSL norms, • Rural & Social Obligation Norms:
every year “x” number of policies
• 25% branches in unbanked rural
areas must be sold in rural areas,
PH/backward etc.
• Invest minimum “x%” in
affordable housing projects,
State Govt’s fire equipment etc.
Else IRDAI imposes penalty..
Exact norms not imp.
RBI IRDAI
Insurance / Pension
sector qs: don’t come
each year.
They are usually
confined to govt
schemes, so we need
not spend too much
mental energy here.
 Internal difference
depends on how many
•Bank branch • Agents & brokers. companies’ policy they
•Business Correspondence • Banks selling policies of can sell- but not imp.
Agent (BankMitra) insurance companies
•… (Bancassurance)
• Surveyor/ Loss Assessor.
• Third Party Administrators (e.g.
Hospital where treatment is
given)

RBI IRDAI
 Non-Life /
General
Life
insurance,
Health

• Subtypes
• Notable
org & Re-
insurance
schemes
 Life Insurance Type At maturity (if no death) At death
Whole life Longer: (e.g. 35 yrs)
Endowment shorter(e.g. 10-20) Yes savings returned** YES

Term (Low premium short term)

e.g. 1 year: 2 lakh Insurance for Rs.330/- NO YES

ULIP: Unit Linked Insurance Plans*

Part of money in insurance, part in Mutual fund Yes savings returned** YES

ELSS: Equity linked savings Scheme YES** NO

(entirely invested in shares) ELSS is not insurance scheme. Subtype
of mutual fund
Money is invested into G-Sec / Government borrowing programs**
PLI 6 plans (govt employees,
CPSE etc.)**
•Whole life assurance
(Suraksha); convertible
whole life assurance
(Suvidha); endowment
assurance (Santosh);
anticipated endowment
assurance (Sumangal); joint
life assurance (Yugal
Suraksha); and children
policy (Bal Jiwan Bima)
Money is invested into G-Sec / Government borrowing programs**
Rural RPLI 6 plans
•whole life assurance Individual names
(Grama Suraksha);
convertible whole life / features not imp
assurance (Grama Suvidha); but the fact that
endowment assurance it’s with Dept of
(Grama Santosh);
anticipated endowment Post rather than
assurance (Grama LIC.
Sumangal); 10 years RPLI
(Grama Priya); and children
policy (Bal Jiwan Bima)
What type of MCQ
• Which ministry?
• Whether target
is 100% RPLI/
PM Fasal
Bima….
Not much imp
because
discontinued
long time
back.
• Feature not
important because
old scheme.
• However, motive is
important.
 Premium: Annual Rs.330/- per LIC & even empaneled pvt
person. bank autodebit. Life insurance cos

Apply: any Indian RESIDENT 18-50 age. NRI also eligible but pay in ₹ only.
1 year “term life” insurance. Any type of death = ₹2 lakhs.
Term insurance= no death, no money. If accident handicap but no death – then no money.
 1931
2l each
• Insurance premium ought to be
decided by mathematical probability
1756 against risk. But, here ‘populism’
₹330, it should be raised, otherwise
loss . [And govt not paying for loss.]
• Then, why Pvt insurance Cos would
330 each join then? Because ‘rural & social
obligation (sell “x” number of policies
premium paid claims on death to poor/PH/weaker’, ELSE IRDAI
penalty. So this scheme help filling
that quota.
2017-18 (₹ crores)
 Public Sector GENERAL insurance cos
and empaneled Pvt general Insurance
Companies
• “Accidental Death”: murder, disaster etc.= 2
lakh
• If not dead but permanent handicap
• 1 eye/hand/leg: 1 lakh
• 2 organs/>: max.2 lakh.
Suicide, alcohol-drugs related death: not eligible

• Any Indian Resident or NRI (18-70 age). Annual Rs.12/- per person. bank auto debit.
• 1 year “term” accident cum death cover. No accident or no death then no money.
 ONLY IF Jeevan ki jyoti • SU: suicide not
stops u get ₹. eligible.
Jeevan Jyoti Suraksha Bima Yojana
Any Indian resident or NRI. Age 18-50 Any Indian resident or NRI. Age: 18-70
term insurance term insurance
‘life’ insurance ‘general’ insurance
Rs.330 Rs.12
Any type of death: Rs.2 lakh • Accidental Death”: murder, natural disaster etc.
Rs. 2l
• 1 eye/hand/leg: 1 lakh
• 2 organs/>: max.2 lakh
Any death Eligible Suicide, alcohol-drugs related death: not eligible

Nope Hospitalization cost… nope.

 Non-Life /
General
Life
insurance,
Health
• RPLI, LIC-AABY,
PMJJBY

Re-
insurance
 Health insurance Fire
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets

Marine Rural
Motor vehicle
• Cargo, vessel • Crops, livestock
 1948-52
• ESIC, Labour Ministry

1957
Health insurance Fire • ECGC, Commerce
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets Ministry, Exporters
1961
• DICGCI (bank
deposits. Max ₹1
lakh). **
1972
Marine Rural • GIC and 4
Motor vehicle
• Cargo, vessel • Crops, livestock subsidiaries
 Subsidiary
Owner Holding
Companies HQ Location,
motto: If
Natl.insurance preparing for
New India
insurance officer
assurance / assistant
Government GIC
exams.
United India

Oriental
 Subsidiary
Owner Holding
Companies
4
Gener
Natl.insurance al NABARD,
Insura 30%
nce
New India Cos.,
assurance 35%
Government GIC
United India
GIC, 35%

Oriental

2002: Govt takes direct control of these Agri. insurance

four general Insurance companies. Company ltd. (2002)
 1948-52
• ESIC, Labour Ministry

1957
Health insurance Fire • ECGC, Commerce
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets Ministry, Exporters
1961
• DICGCI (bank
deposits. Max ₹1
lakh).
1972
Marine Rural • GIC and 4
Motor vehicle
• Cargo, vessel • Crops, livestock subsidiaries
Beneficiary?
• If you’re working in any (non-
seasonal) establishment with
10/> employees. AND
• Your salary less than
₹21,000/-
• Who pays ESIC premium?
“x%” from employee’s wages,
“y%” from employer’s side.
• Project Panchdeep:
digitization and
automation of ESIC
processes by WIPRO
(finished 2017).
• Project Arrow:
Modernization of Indian
Post (2008)
 Pause Video to
Attempt it Yourself
Any (non-seasonal)
establishment with
10/> employees

Pause Video to
Attempt it Yourself
 1948-52
• ESIC, Labour Ministry

1957
Health insurance Fire • ECGC, Commerce
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets Ministry, Exporters
1961
• DICGCI (bank
Other schemes? deposits. Max ₹1
lakh).
1972
Marine Rural • GIC and 4
Motor vehicle
• Cargo, vessel • Crops, livestock subsidiaries
 Premium Treatment

• BPL: 250 • Upto Rs. 1 lakh

• APL: 500
• Minor without parents:
free

• Low profile old scheme so we need not apply

too much brain energy here.
Only BPL [upto 5 people in a family, NO AGE LIMIT]
• Only 1 time Registration Rs.30
• No premium. Govt bears it.
• ₹30k for medical treatment [smartcard,
cashless].
• even existing ailment, even private
hospital.
• ₹25k for accidental death
• Breadwinner dies: ₹50 x 15 days.
• ++ Senior Citizen Health Insurance
2008 2014
Scheme (SCHIS): if 60/>-: they get addl.
• Labour Min • Health ministry [admin]
30k for treatment.
• Both subsumed in PM-JAY
Budget-2018: Ayushman Bharat

A) 1.5 lakh PHC to be B) National Health Protection

transformed into Health & Scheme (AB-NHPS)
Wellness Centres= Free drugs,
checkup, mother-child care

Later renamed ‘PM Jan Arogya

Yojana (PMJAY)’
 Budget-2018: Ayushman Bharat

A) 1.5 lakh PHC to be B) National Health Protection

transformed into Health & Scheme (AB-NHPS)
Wellness Centres= Free drugs, Subsumed
checkup, mother-child care
1. Senior Citizen
Health Insurance
Motto” Swasthya Aapka, Scheme (SCHIS)
Saath Hamara”. Later renamed ‘PM Jan Arogya 2. Rashtriya Swasthya
2018, Sept: launched from Yojana (PMJAY)’ Bima Yojana
Ranchi, Jharkhand. (RSBY)
No limit on
family size and
age of members
upto Rs 5 lakh
per family, per
year
Governing Board
•Health Minister, NITI CEO, NHA CEO, experts
•State govt representatives on rotational basis**

National Health Authority (NHA) & its CEO

State Health Agencies (SHA)

Hospitals ₹5l/family/
per year
Governing Board
•Health Minister, NITI
CEO, NHA CEO, experts

NHA & its CEO

State Health
Agencies
 National Health Authority

• Individual states have freedom to

Gujarat-SHA MH-SHA form …SHA in the form of a ‘trust,
society, not-for-profit company…”

₹5l/family/
per year
 National Health Authority

• Individual states have freedom to

Gujarat-SHA MH-SHA form …SHA in the form of a ‘trust,
society, not-for-profit company…”
• SHA ties up with an Insurance
• Or SHA direct implements scheme..
company

• Empanelling the private hospitals, fund release, complaint redressal…

• Pradhan Mantri Aarogya Mitra (PMAM) in Hospitals to help families.
• What is this “Special category
states” – will learn with Pill#2->
Finance Commission.
₹5l/family/
per year
₹5l/family/
per year
₹5l/family/
per year
₹5l/family/
per year
• Read monthly yojana, Kurukshetra mags then easy to frame intro, conclusions like this.
• Page
81
 Pause Video to
Attempt it Yourself
Everything boils down to
whether second statement is
right ?
Pause Video to
Attempt it Yourself
• Whether Maharashtra’s SHA agency
adopted trust model or tied with insurance
company & whether Guj is getting seat in
NHA governing body in first rotation…. NOT
IMP.
• More than pvt mock tests, better go thru
last five years upsc papers vs. cut-offs
Pause Video toto
get better idea on howAttempt
much prep. Is req.
it Yourself
 1948-52
• ESIC, Labour Ministry

1957
Health insurance Fire • ECGC, Commerce
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets Ministry, Exporters
1961
• DICGCI (bank
What abt crops? deposits. Max ₹1
lakh).
1972
Marine Rural • GIC and 4
Motor vehicle
• Cargo, vessel • Crops, livestock subsidiaries
 Premium

No crop loss, then no

Payment
payment.
 Premium

Payment
 It’s compulsory for
farmer to buy
crop-insurance IF
he’s taking agri.
Loan from banks

Farmer to pay ₹ 5000. but Insurance company’s premium 10k, so

remainder amt paid by Govt (union-state: 50:50)
 “fig. not •Empaneled Private insurance cos.
important” E.g. ICICI Lombard.
•(Govt) Agriculture Insurance
1
Company of India Limited (AIC)
•4 (Govt) General Insurance cos.
other
•SBI general insurance etc.

But, only 1 insurance company allowed in a given

cluster of districts.
 Pause Video to
Attempt it Yourself
If they asked to find
wrong statement then
answer will be “A”
Pause Video to
Attempt it Yourself
 1948-52
• ESIC, Labour Ministry

1957
Health insurance Fire • ECGC, Commerce
Accident cum Death
• Cashless/ reimbursement • Houses, industrial assets Ministry, Exporters
1961
What abt this? • DICGCI (bank
deposits. Max ₹1
lakh).
1972
Marine Rural • GIC and 4
Motor vehicle
• Cargo, vessel • Crops, livestock subsidiaries
 Third Party Motor Vehicle Comprehensive Vehicle
Insurance Insurance covers
- Motor Vehicles Act (1988) - This is not statutory req.
requires all motor vehicle - both third party as well as
owners to purchase it. you & your vehicle against
(statutory req) accident, vandalism,
- When your vehicle hits natural disasters etc but
another vehicle, person or then it has higher premium
property-> that victim then simple 3rd party-
(third party) registers a walla insurance.
case, gets compensation.
IRDAI regulates premium
rates & other norms.
 Third Party Motor Vehicle Comprehensive Vehicle
Insurance Insurance covers
- Motor Vehicles Act (1988) - This is not statutory req.
requires all motor vehicle - both third party as well as
owners to purchase it. you & your vehicle against
(statutory req) accident, vandalism,
- When your vehicle hits natural disasters etc but
another vehicle, person or then it has higher premium
property-> that victim than simple 3rd party-
(third party) registers a walla insurance.
case, gets compensation.
IRDAI regulates premium
rates & other norms.
 Non-Life /
General
Life
insurance,
Health
RPLI, LIC-AABY,
PMJJBY

Re-
insurance
 Banks Insurance Cos.
Deposit insurance Insurance on their biz

DICGCI [Max. 1 lakh rs.] REINSURANCE Cos.

Refer to burning issues in
banking-walle lecture / handout
Peak Profit Peak Loss

Re-Insurance

Life Insurance &

General Insurance
Profit Great Loss

Re-Insurance

Life Insurance &

General Insurance

• Previously, GIC was sole reinsurer. Every

insurance company was required to buy re-
insurance from it.
• 2015: Insurance Act Amendment - More
than one RE allowed.
 • But I’ve to buy re-insurance as it’s
life
statutory requirement under Insurance Act
and IRDAI norms. 
General • High cost of operation→ can’t reduce
premium rates for clients.

GIC-RE dictated the re-

insurance PREMIUM
rates & biz agreement • I can reinsurance your ₹1 lakh crore worth of policies,
but I want “X crores”.
• Like it or leave it. Competition Commission of India
can’t do much abt it, because no other company was
permitted :P :P
 life
Operational costs declined:
1. Expand network to reach people▲
2. Riskier and much bigger corporate
General projects can be insured.

life
GIC-RE dictated the re-
insurance PREMIUM General
rates & biz agreement

Multiple cos: lower

premium
 Non-Life /
General
Life
insurance,
Health

Re-
insurance
• 1934: RBI -> Bahubali in • 1996: IRDA setup,
Banking .Reg Act‘49 • 1999: Act
• DRT->SARFAESI Act 2002 • 2014: name changed:
• Payment regulation & Insurance Regulatory And
settlement system act-> Development Authority Of
PRB (Budget 2017) India. (IRDAI)

Narsimhan I Malhotra
(1991) & II Committee 1993
(1998) [RBI Gov] [IAS, RBI Gov.]
 PFRDA (2003-13), IBBI (2016)

RBI (1934), SEBI (92-99)

IRDAI (96-99)
 Both IAS/non-IAS
5 yr / Chairman have been chairman
65 age
• 2013-18: TS
Vijayan: LIC career
5 yr / 5 4 Part
62 age Fulltime time officer
• 2018: Dr. Subhash
Total 10, re-appointment yes. C. Khuntia (IAS)
 NPA/TBS

IDBI, IL&FS
 NPA/TBS

IDBI, IL&FS
 Insurance Penetration Insurance density

total premium/total GDP Total Premium / Total population

<3.5% (2016). = Per capita premium

<₹60 (2016)

For India, they’ve improved in last decade. both are low compared to many
developing countries because of the challenges mentioned in previous slides.
A. Money
B. Banking
C. SEBI-Sharemarket, Financial Market,
Companies Act and Corporate
Governance -> Quiz
D. Insurance, Pension, fin. Inclusion

SEBI-walla handout
Quiz@9:30PM