The Peoples' Commission on Public Sector and Public Services has urged the Union Cabinet Secretary Rajiv Gauba to advise the Cabinet not to proceed further on government divesting some part of its stakes in Life Insurance Corporation of India (LIC).
The Peoples' Commission, a discussion forum comprising several noted personalities from varied fields, told Gauba that the government should first appoint a Chairman for the Insurance Regulatory and Development Authority of India (IRDAI).
Citing that IRDAI remains headless for the last eight months the Peoples' Commission said: "This leads one to the inevitable inference that the government has chosen to weaken regulatory oversight over the proposal to disinvest the LIC, so as to facilitate it is being rushed through."
The discussion forum said that a headless IRDAI considering the draft initial public offer (IPO) proposal for disinvestment of the LIC erodes the credibility of the exercise.
Had there been an IRDAI fully constituted as envisaged in Section 4 of the IRDA Act, it would have, in all likelihood, turned down the draft IPO proposal that deprives the policyholders of what is legitimately due to them and which violates the principles of natural justice from their point of view, Peoples' Commission said.
Continuing further the Peoples' Commission urged Gauba to place their letter before the Union Cabinet, if necessary, and advise the Union Cabinet that no further action should be pursued on LIC disinvestment till such time the Ministry of Finance positions a competent person of integrity to head the IRDAI, with adequate time at his/her disposal to examine the complexities of the proposed IPO.
The Peoples' Commission comprises people like Former Finance Minister of Kerala Thomas Issac, Former Secretary, Ministry of Power and Economic Affairs E.A.S. Sarma, T.S. Prasad Rao, Former Chairman and Managing Director, Indian Petrochemicals Corporation Ltd and others.
The LIC on Sunday filed the Draft Red Herring Prospectus (DHRP) with the Securities and Exchange Board of India (SEBI).