Malhotra Commission – Role In Addition To Recommendations

In persuasion to convey Reforms inward Insurance sector to evolute the Indian insurance manufacture together with to recommend its hereafter administration the key authorities formed Malhotra Committee, Headed yesteryear sometime Fiance Secretary together with RBI Governor, R. N. Malhotra inward the yr 1993.
The reforms were aimed at “creating a to a greater extent than efficient together with competitive fiscal organisation suitable for the requirements of the economic scheme keeping inward heed the structural changes currently underway together with recognising that insurance is an of import part of the overall fiscal organisation where it was necessary to address the require for similar reforms”.


  • To advise the construction of the insurance industry, to assess strengths together with weaknesses of insurance companies inward damage of the objectives of creating an efficient together with feasible insurance industry, which volition get got a broad make of insurance services, a diversity of insurance products amongst a high character of services to the populace together with servicing equally an effective musical instrument for mobilization of fiscal resources for development.
  • To brand recommendations for changing construction of insurance industry, for changing full general policy frame piece of employment etc.
  • To brand specific suggestions regarding LIC together with GIC amongst a persuasion to ameliorate their functioning. 
  • To brand recommendations on rule together with supervision of the insurance sector inward India.
  • To brand recommendations on role together with functioning of surveyors, intermediaries similar agents etc inward the insurance sector. 
  • To brand recommendations on whatever other affair which are relevant for evolution of hte insurance manufacture inward India.


In 1994, the commission submitted the study together with gave the next recommendations


  1. Government stake inward the insurance Companies to survive brought downwards to 50%
  2. Government should get got over the holdings of GIC together with its subsidiaries together with thus that these subsidiaries tin human activeness equally independent corporations.
  3. All the insurance companies should survive given greater liberty to operate


  1. Private Companies amongst a minimum paid upwardly upper-case missive of the alphabet of Rs. 1 billion should survive allowed to locomote inward the industry.
  2. No Company should bargain inward both Life together with General Insurance through inward a unmarried entity.
  3. Foreign companies may survive allowed to locomote inward the manufacture inward collaboration amongst the domestic companies. 
  4. Postal Life Insurance should survive allowed to operate inward the rural market. 
  5. Only i State Level Life Insurance Company should survive allowed to operate inward each staet. 
  6. The Insurance Act should survive changed. 
  7. An Insurance Regulatory Body should survive laid up.
  8. Controller of Insurance (Currently a part of the Finance Ministry) should survive made independent. 


  1. Mandatory Investments of LIC Life Fund inward authorities securities to survive reduced from 75% to 50%
  2. GIC together with its subsidiaries are non to fit to a greater extent than than 5% inward whatever society (Their electrical current holdings to survive brought downwards to their degree over a menstruation of time.)

Customer Service

  1. LIS Should pay involvement on delays inward payments beyond xxx days.
  2. Insurance companies must survive encouraged to gear upwardly unit of measurement linked pension plans. 
  3. Computerization of operations together with updating of technology scientific discipline to survive carried out inward the insurance industry.
Overall, the commission strongly felt that inward lodge to ameliorate the client services together with increase the coverage of the insurance manufacture should survive opened upwardly to competition. But at the same time, the commission felt the require to practise caution equally whatever failure on the part of novel players could ruin the populace confidence inward the industry.  
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