(1) Every insurer 1 [***] shall, in respect of the insurance business carried on by him in 2 [India], deposit and keep deposited with the Reserve Bank of India in one of the offices in India of the Bank for and on behalf of the Central Government 3 [the amount hereafter specified, either in cash or in approved securities estimated at the market value of the securities on the day of deposit, or partly in cash and partly in approved securities so estimated]:--
4 [5 [(a) in the case of life insurance business, a sum equivalent to one per cent. of his total gross premium written in India in any financial year commencing after the 31st day of March, 2000, not exceeding rupees ten crores;
(b) in the case of general insurance business, a sum equivalent to three per cent of his total gross premium written in India, in any financial year commencing after the 31st day of March, 2000, not exceeding rupees ten crores;
(c) in the case of re-insurance business, a sum of rupees twenty crores;]]
6 [***]
7 [Provided that, where the business done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both, the amount to be deposited under this sub-section shall be 8 [one hundred thousand rupees] only:]
9 [Provided further that in respect of any insurer not having a share capital and carrying on only such insurance business as in the opinion of the Central Government is not carried on ordinarily by insurers under separate policies, the Central Government may, by notification in the Official Gazette, order that the provisions of this sub-section shall apply to such insurer with the modification that instead of the sum of rupees twenty lakhs or rupees ten lakhs, as the case may be, the deposit to be made by such insurer shall be such amount, being not less than one hundred and fifty thousand rupees, as may be specified in the said order.]
10 [***]
(2) Where the insurer is an insurer specified in sub-clause (c) of clause (9) of section 2, he shall be deemed to have complied with the provisions of this section as to deposits, if in respect of 11 [***] insurance business 12 [carried on] by him in 2 [India] under a standing contract of the nature referred to in sub-clause (c) of clause (9) of section 2 a deposit of an amount one-and-a-half times that specified in sub-section (1) 13 [***] has been made in the Reserve Bank of India in one of the offices in India of the Bank for and on behalf of the Central Government in cash or approved securities estimated at the market value of securities on the day of deposit by or on behalf of the underwriters who are members of the Society of Lloyd's with whom he has his standing contract.
14[(3) Where the deposit is to be made by an insurer not carrying on insurance business in India immediately before the commencement of the Insurance (Amendment) Act, 1968, a deposit of rupees ten lakhs shall be made before the application for registration is made, 15 and the provisions of clause (ii) of sub-section (1A) shall apply to such insurer after his registration as they apply to an insurer specified in clause (a) of sub-section (1).
(4) An insurer shall not be registered for any class of insurance business in addition to the class or classes for which is already registered until the full deposit required under sub-section (1) has been made.
(5) Where an insurer who intends to become a member of a group, does not carry on all the classes of insurance business carried on by the other insurers in such group, or, where out of the several insurers who desire to form themselves into a group, any insurer does not carry on all the classes of insurance business carried on by the other insurers who desire to form themselves into the group, such insurer may be registered for that class or those classes of insurance business which is or are carried on by the other insurers of the group or the proposed group, as the case may be, and where any application for registration is made by any such insurer, the 16 [Authority] may, notwithstanding anything contained in sub-section (2A) of section 3 or sub-section (4), register such insurer for one or more additional classes of insurance, if the following conditions are fulfilled, namely:--
(a) the 17 [Authority] is satisfied that registration for the proposed one or more additional classes of insurance business would qualify the insurer to become a member of a group;
(b) agreements have been executed by all the insurers in the group or proposed group, as the case may be, 18 and such agreements, in the opinion of the 17 [Authority], satisfy the requirements of the Explanation to sub-section (1B); and
(c) the insurer has, after the commencement of the Insurance (Amendment) Act, 1968, made deposit of a sum not less than the total of all the installments of deposit which he would have been required to make after such commencement till the date of his becoming a member of the group, had he been a member of the group from such commencement.
(6) The 17 [Authority] shall cancel the registration made in pursuance of the provisions of sub-section (5), if the insurer referred to therein fails to become, within a period of three months from the date of such registration, a member of the group or proposed group, as the case may be, and, where such registration has been cancelled, the provisions of this Act shall apply to the insurer as if he had not been registered for the class or classes of insurance business in relation to which his registration has been cancelled.]
(7) Securities already deposited with the Controller of Currency in compliance with the Indian Life Assurance Companies Act, 1912 (16 of 1912), shall be transferred by him to the Reserve Bank of India and shall, to the extent of their market value 19 [as at the date of the commencement of this Act], be deemed to be deposited under this Act, 20 [as the installment or as part of the installment to be made under the foregoing provisions of this section before the application for registration is made whether any such application is or is not in fact made.]
(8) A deposit made in cash shall be held by the Reserve Bank of India to the credit of the insurer and shall 21 [except to the extent, if any, to which the cash has been invested in securities under sub-section (9A)] be returnable to the insurer in cash in any case in which under the provisions of this Act a deposit is to be returned; and any interest accruing due and collected on securities deposited under sub-section (1) or sub-section (2) shall be paid to the insurer, subject only to deduction of the normal commission chargeable for the realization of interest.
22 [(9) The insurer may at any time replace any securities deposited by him under this section with the Reserve Bank of India either by cash or by other approved securities or partly by cash and partly by other approved securities, provided that such cash, or the value of such other approved securities estimated at the market rates prevailing at the time of replacement, or such cash together with such value, as the case may be, is not less than the value of the securities replaced estimated at the market rates prevailing when they were deposited.
(9A) The Reserve Bank of India shall, if so requested by the insurer,--
(a) sell any securities deposited by him with the Bank under this section and hold the cash realised by such sale as deposit, or
(b) invest in approved securities specified by the insurer the whole or any part or a deposit held by it in cash or the whole or any part of cash received by it on the sale of or on the maturing of securities deposited by the insurer, and hold the securities in which investment is so made as deposit,
23 [and may charge the normal commission on such sale or on such investment].
(9B) Where sub-section (9A) applies,--
(a) if the realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) falls short of the market value of the securities at the date on which they were deposited with the Bank, the insurer shall make good the deficiency by a further deposit either in cash or in approved securities estimated at the market value of the securities on the day on which they are deposited, or partly in cash and partly in approved securities so estimated, within a period of two months from the date on which the securities matured or were sold or where the securities matured or were sold before the 21st day of March, 1940, within a period of four months from the commencement of the Insurance (Amendment) Act, 1940 (20 of 1940); and unless he does so the insurer shall be deemed to have failed to comply with the requirements of this section as to the deposits; and
(b) if the cash realised by the sale of or on the maturing of the securities (excluding in the former case the interest accrued) exceeds the market value of the securities at the date on which they were deposited with the Bank, the Central Government may, if satisfied that the full amount required to be deposited under sub-section (1) is in deposit, direct the Reserve Bank of return the excess.
(10) If any part of a deposit made under this section is used in the discharge of any liability of the insurer, the insurer shall deposit such additional sum in cash or approved securities 24 [estimated at the market value of the securities on the day of deposit, or partly in cash and partly in such securities,] as will make up the amount so used, the insurer shall be deemed to have failed to comply with the requirements of sub-section (1), unless the deficiency is supplied within a period of two months from the date when the deposit or any part thereof is so used for discharge of liabilities.
____________________
1. The words "not being an insurer specified in sub-clause (c) of clause (9) of section 2" omitted by Act 41 of 1999, section 30 and Schedule I.
2. Substituted by Act 62 of 1956, section 2 and Schedule, for "the State" (w.e.f. 1-11-1956).
3. Substituted by Act 20 of 1940, section 4, for certain words (with retrospective effect).
4. Substituted by Act 62 of 1968, section 6, for clauses (a) to (i) (w.e.f. 1-6-1969).
5. Substituted by Act 41 of 1999, section 30 and Schedule I, for clauses (a) and (b) (w.e.f. 19-4-2000).
6. Clause (j) omitted by Act 20 of 1940, section 4.
7. Added by Act 20 of 1940, section 4.
8. Substituted by Act 62 of 1968, section 6, for "ten thousand rupees" (w.e.f. 1-6-1969).
9. Inserted by Act 62 of 1968, section 6 (w.e.f. 1-6-1969).
10. Sub-sections (1A), (1B), (1C), (1D) and (1E) inserted by Act 62 of 1968, section 6 (w.e.f. 1-6-1969) and omitted by Act 41 of 1999, section 30 and Schedule I (w.e.f. 19-4-2000).
11. The words "any class of" omitted by Act 62 of 1968, section 6 (w.e.f. 1-6-1969).
12. Substituted By Act 11 of 1939, section 3 for "transacted".
13. The words "as the deposit for that class of insurance business" omitted by Act 62 of 1968, section 6 (w.e.f. 1-6-1969).
14. Substituted by Act 62 of 1968, section 6, for sub-section (3), (4), (5) and (6) (w.e.f. 1-6-1969).
15. Ed: In sub-section (3) the words which have been given in italics have become inapplicable because sub-section (1A) where in clause (ii) appears has been omitted and clause (a) of sub-section (1) has been substituted by Act 41 of 1999, section 30 and Schedule I.
16. Substituted by Act 41 of 1999, section 30 and Schedule I, for "Controller".
17. Substituted by Act 41 of 1999, section 30 Schedule I, for "Controller" (w.e.f. 19-4-2000).
18. Ed: In clause (b) of sub-section (5) the words which have been given in italics have become in applicable because sub-section (1B) in which Explanation appears has been omitted by Act 41 of 1999, section 30 and Schedule I.
19. Substituted by Act 20 of 1940, section 4, for "on the day of the first deposit made in compliance with this Act" (with retrospective effect).
20. Substituted by Act 20 of 1940, section 4, for "in respect of the life insurance business of the insurer" (with retrospective effect).
21. Inserted by Act 20 of 1940, section 4 (with retrospective effect).
22. Substituted by Act 20 of 1940, section 4, sub-section (9) (with retrospective effect).
23. Added by Act 13 of 1941, section 7 (w.e.f. 8-4-1941).
24. Inserted by Act 11 of 1939, section 4.