Writeback

The story was essentially built around the letter dated May 14 by the Banking Secretary to the IRDA. The letter has been fully replied by the Authority on May 22. This statement will enable the reader to know the actual situation regarding the Institute of Risk Management and my role in it:

1. The necessity: The Institute will act as the research facility of the IRDA. Its establishment has been recommended by the insurance companies and members of the Insurance Advisory Committee. The research activity carried on in the Institute will develop Indian insurance business.

2. Three persons, including myself, have been made as the life time directors of the Institute: The appointment is only as directors not subject to retirement by rotation. The first meeting of the directors of the institute decided that the directors representing the three founders would be holding office at the pleasure of their organisations which can withdraw the nominations and appoint somebody else.

3. I have provided for myself a pension policy and the continuation of employment beyond 9th June 2003: The employment with IRDA and consequently with the IIRM did not give me any added pension benefits. By my letter dated 22nd May, I had clearly indicated to the Government that subsequent to June 9, 2003, I will not be part of IRDA and the IIRM.

4. Funds have been placed with the IIRM by IRDA: As early as October 2002, Rs 10 crore were placed in endowment with the IIRM. Interest arising out of this endowment is to be used for research activities at the IIRM. The endowment is supervised by the Board of Trustees consisting of 5 persons 8212; including two representatives of IRDA 8212; to be used for research activities at the IIRM. No prior approval of any authority is required under the IRDA Act.

5. Competence of IRDA to set up the IIRM: Section 14 of the IRDA Act enables the Authority to set up research organisation in the insurance and re-insurance areas. For the purpose, the Authority has also been authorised to raise a levy from the insurance companies.

I would like to emphasise that from June 9, 2003, the day I retired from IRDA, I am not the Chairman of the IIRM. IRDA has to find a nominee to be appointed in my place.

The following is from the letter Rangachary wrote on May 22 to the Banking Secretary:

It is not my intention to continue to be either with the Authority or with any organisation concerned with the Authority after June 9, 2003. The Articles of Association were drafted by a firm of consultants who are specialists in this area.

Apparently, taking note of the fact that the company is one limited by guarantee and is not one of shares, the consultants thought that for the continuity of the organisation to carry on research and other connected activities. Chairman, IRDA, could perhaps have not been accepted by the Registrar of Companies who had to register the company. I am requiring the consultants to clear this issue and I will revert to you on this. But let me reiterate that I have no intention of continuing with the institute.

Jaya Basu replies: The report questioned the propriety of N. Rangachary allowing Rs 10 crore of IRDA funds being invested in the IIRM where he had been named a director for life. Rangachary8217;s claim that he ceased to be a director on IIRM board on June 9, the date he retired from IRDA, was contradicted by the present chairman of IRDA, C.S. Rao. He had confirmed to The Sunday Express that Rangachary continued in the position and that Rao hadn8217;t replaced him as the position was by name and belonged to Rangachary.

Even the letter written by Banking Secretary Vineeta Rai to Rangachary on May 14 pointed out that the Rs 10 crore invested by IRDA in the IIRM actually belonged to the Public Accounts Fund.