Jurisdiction - India
News
India – Insurance & Real Estate September Review.

24 October, 2013

 

Insurance

On July 19, 2013, the Insurance Regulatory Development Authority (‘IRDA’) notified the IRDA (Licensing of Banks as Insurance Brokers) Regulations, 2013 (‘Insurance Regulations’). Under the Insurance Regulations, IRDA has permitted scheduled banks to act as insurance brokers. The proposal has been made to enable insurance companies to expand their distribution network. Any bank seeking to obtain a license to act as an insurance broker is required to obtain the prior approval of RBI for the same. The roles and responsibilities and caps on brokerage payable by a bank acting as an insurance broker are in line with the roles and responsibilities outlined for non-bank brokers. Interestingly, there is no stipulation permitting banks to act as reinsurance brokers.

 

Real Estate


On August 29, 2013, the Lok Sabha passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013 (‘Land Bill’). On September 4, 2013, the Rajya Sabha also passed the Land Bill. The Land Bill seeks to replace the existing Land Acquisition Act, 1894 (‘Land Act’), and has received the Presidential assent on September 26, 2013. The Land Bill will come into force once the same is notified.


The Land Bill inter alia requires the consent of 80% of land owners for acquisition of land by a private company for public purposes, and consent of 70% of land owners for acquisition of land for public-private partnership projects. It also stipulates that a “social impact assessment” and “environment impact assessment”, if required, be carried out by an expert group prior to every acquisition. In case of irrigation projects that are subject to environment impact assessment under any other law, the requirements of carrying out social impact assessment will not apply. The award for the compensation is to be determined on the basis of the market value of the land considering the prescribed parameters, and a rehabilitation and resettlement scheme for the affected persons is to be formulated, along with the appointment of an administrator for the same. The possession of the land will be granted by the Collector only after ensuring payment of full compensation and monetary relief under the rehabilitation and resettlement award within the prescribed time period.


Under the Land Bill, the definition of ‘public purpose’ inter alia includes (i) strategic purposes i.e., naval, military, air force and armed forces; (ii) infrastructure projects; (iii) projects for project-affected families; and (iv) housing projects/planned development for villages, and residential projects for weaker sections of society, poor, landless, etc.


The Land Bill also requires unutilised land to be returned to the original owner/heirs if the same is not utilised, within five years, for the purpose for which it was acquired. The Land Bill further provides that if acquired land is transferred to any person for consideration, and if no development has taken place for five years from the acquisition, then 40% of the appreciated land value will be shared with the original owners/heirs. This will be applicable only on the first sale/transfer of such acquired land.


Although the Land Bill provides adequate safeguards to land owners/occupants in the form of resettlement and compensation packages, and transparency in the process of acquisition/ compensation/ rehabilitation, etc., the Land Bill also impacts the ability of private owners to purchase land exceeding the prescribed threshold limits (as maybe prescribed by each State Government) through private negotiations, which was earlier unrestricted.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

Comments are closed.