18. Functions of Corporation.—(1) The functions of the Corporation shall include—
(a) the carrying on of any part of the general insurance business, if it thinks it desirable to do so;
1. Ins. by Act 3 of 1985, s. 3 (w.e.f. 17-9-1984).
2. Subs. by Act 4 of 1986, s. 2 and the Schedule, for section 17 (w.e.f. 15-5-1986)
3. Ins. by Act 3 of 1985, s. 4 (w.e.f. 17-9-1984).
11
(b) aiding, assisting and advising the acquiring companies in the matter of setting up of standards
of conduct and sound practice in general insurance business and in the matter of rendering efficient
service to holders of policies of general insurance;
(c) advising the acquiring companies in the matter of controlling their expenses including the
payment of commission and other expenses;
(d) advising the acquiring companies in the matter of the investment of their funds;
(e) issuing directions to acquiring companies in relation to the conduct of general insurance
business:
1
[Provided that all the functions of the Corporation specified in this sub-section, on and from the
commencement of the General Insurance Business (Nationalisation) Amendment Act, 2002, shall be
performed by the Central Government.]
(2) In issuing any directions under sub-section (1), the 2
[Central Government] shall keep in mind the
desirability of encouraging competition amongst the acquiring companies as far as possible in order to
render their services more efficient.
19. Functions of acquiring companies.—(1) Subject to the rules, if any, made by the Central
Government in this behalf and to its memorandum and articles of association, it shall be the duty of every
acquiring company to carry on general insurance business.
(2) Each acquiring company shall so function under this Act as to secure that general insurance
business is developed to the best advantage of the community.
(3) In the discharge of any of its functions, each acquiring company shall act so far as may be on
business principles and where any directions have been issued by the 3
[Central Government or the
Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the
Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)], shall be guided by such
directions.
(4) For the removal of doubts it is hereby declared that the Corporation and any acquiring company
may, subject to the rules, if any, made by the Central Government in this behalf, enter into such contracts
of reinsurance or reinsurance treaties as it may think fit for the protection of its interests.
20. Balance of profit how to be utilised.—(1) After making provision for bad and doubtful debts,
depreciation in assets, provident, superannuation, welfare and other funds, debts due to Government and
all other matters for which provision is necessary under any law or which are usually provided for by
insurance companies, every acquiring company shall distribute the balance of profit as dividends.
(2) Any profit made by the Corporation and any sums received by the Corporation by way of
dividends or otherwise shall be dealt with by it in such manner as may be prescribed.
21. Interim provisions for management of Indian insurance companies.—(1) Notwithstanding
anything contained in the Companies Actor in the memorandum and articles of association of any Indian
insurance company, on and from the appointed day and until a new board of directors of the Indian
insurance company is duly constituted, the management of the company shall continue to vest in the
Custodian in charge of the management of the undertaking of that company immediately before the
appointed day by virtue of the provisions contained in the General Insurance (Emergency Provisions) Act,
1971 (17 of 1971), and the Custodian shall be entitled, subject to such directions as the Central
Government may issue in this behalf, to exercise all the powers and do all acts and things as may be
exercised or done by the company or by its board of directors.
(2) Nothing contained in sub-section (1) shall be deemed to prevent the Central Government from
appointing any other person to take charge of the management of the undertaking of any Indian insurance
company during the period referred to in that sub-section if for any reason it becomes necessary so to do,
1.Ins. by Act 40 of 2002, s. 4 (w.e.f. 21-3-2003).
2. Subs. by s. 4, ibid., for “Corporation” (w.e.f. 21-3-2003).
3. Subs. by s. 5, ibid., for “Corporation” (w.e.f. 21-3-2003).
12
and any person so appointed may exercise all the powers and do all acts and things which a Custodian
may exercise or do under sub-section (1).
(3) The Custodian referred to in sub-section (1) and the person appointed under sub-section (2) shall
be entitled to such salaries and other allowances as the Central Government may specify in this behalf and
shall hold office during the pleasure of the Central Government.
22. Power of Central Government to transfer employees.—1
[The Central Government or any
person authorised by it may at any time transfer any officer] or employee from an acquiring company or
the Corporation to any other acquiring company or the Corporation, as the case may be, and the officer or
employee so transferred, shall continue to have the same terms and conditions of service as were
applicable to him immediately before such transfer.
23. Power of Central Government to issue directions.—The Corporation and every acquiring
company shall, in the discharge of its functions, be guided by such directions in regard to matters of
policy involving public interest as the Central Government may give.