“We have found massive problems in insurance operations of SKS Microfinance,” Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), told Business Line here on Tuesday.
The irregularities included receiving the cheques of death claims from its insurers on its name, which is illegal.
The only listed MFI in the country, based out of Hyderabad, had also “collected” higher commissions than permitted by the insurance regulator while selling the insurance policies.
SKS has been summoned by IRDA for an explanation, Business Line reports. More regulatory trouble is not what SKS needs, with its already plummeting stock prices. Having said that, micro-insurance is tricky business and agencies sometimes expose themselves to regulatory risks in trying out innovative solutions to improve access for the poor. On the other hand, some agencies try to be clever and try to intentionally control their clients’ insurance pay-outs so that these could be held as a sort of proxy-collateral for their outstanding loans. I am not insinuating anything in this particular case, of course…