 bill no 60 of 2009 the life insurance corporation (amendment) bill, 2009 a billfurther to amend the life insurance corporation act, 1956be it enacted by parliament in the sixtieth year of the republic of india as follows:—1 (1) this act may be called the life insurance corporation  (amendment) act, 2009short title and commencement(2) it shall come into force on such date as the central government may, by notificationin the official gazette, appoint31 of 195652 in the life insurance corporation act, 1956 (hereinafter referred to as the principal act), for section 5, the following section shall be substituted, namely:—substitution of new section for section 5capital of corporation"5 the paid-up equity capital of the corporation shall be one hundred crore of rupees provided by the central government after due appropriation made by parliament by law for the purpose and which may be enhanced to such an amount as the central government may, by notification, determine" 3 in section 18 of the principal act, sub-section (4) shall be omittedamendment of section 18amendment of section 264 in section 26 of the principal act, for the words "once at least in every two years", the words "every year" shall be substituted5 for section 28 of the principal act, the following section shall be substituted, namely:—5substitution of new section for section 28"28 (1) if as a result of any investigation undertaken by the corporation under section 26, any surplus emerges,—surplus from life insurance business, how to be utilised(a) ninety per cent or more such surplus, as the central government may approve, shall be allocated to or reserved for the life insurance policy-holders of the corporation;10(b) such percentage of remaining surplus as the central government may approve shall be credited to separate account maintained by the corporation; and(c) the remainder shall be paid as dividend15(2) the funds available in the account maintained by the corporation under clause (b) of sub-section (1) shall be utilised for such purpose and in such manner as the central government may determine"amendment of section 376 in section 37 of  the principal act, for the words "by the central government", thewords "to the extent as the central government  may, by order, from time to time, determine" shall be substituted207 in section 44 of  the principal act, clause (b) shall be omittedamendment of section 44 amendment of section 488 in section 48 of the principal act, in sub-section (2), in clause (cc), the words "and agents'' at both the places where they occur, shall be omitted9 in section 49 of the principal act, in sub-section (2),—amendment of section 49(i) for clause (b), the following clause shall be substituted, namely:—25"(b) the method of recruitment of employees and agents of the corporation and the terms and conditions of the agents;"; (ii) clause (j) shall be omitted statement of objects  and  reasonsthe life insurance corporation act, 1956 (the lic act) nationalised the life insurance business in india by transferring all life insurance business to a corporation, namely, the life insurance corporation of  india (lic), established for the purpose this act also provided for the regulation and  control of the business of the lic the insurance act, 1938, however, remained as the principal law to regulate and exercise supervision over all entities transacting insurance business in india with the enactment of the insurance regulatory and development authority act, 1999, the insurance business was opened up to private sector, as a result of which, in addition to lic,  twenty-one private sector companies have started transacting life insurance business in the country2 the insurance regulatory and development authority (irda) while recommending amendments to the insurance act, 1938, the insurance regulatory and development authority act, 1999 and the general insurance business (nationalisation) act, 1972 also made recommendations for amending the  lic  act in order to bring this act in consonance with the insurance act, 1938 the government thereafter also consulted  lic and finalised amendments to lic act, 19563 the life insurance corporation (amendment) bill, 2008 was introduced on the 22nd december, 2008 in the 14th lok sabha which lapsed due to dissolution of the 14th lok sabha 4 the central government has decided to introduce the life insurance corporation(amendment) bill, 2009, on the lines of the life insurance corporation (amendment) bill, 2008 introduced in the 14th lok sabha proposing to amend the life insurance corporation act, 1956, inter alia, to—(i) provide for raising  of minimum capital of the life insurance corporation of indiafrom  five crore of rupees to hundred crore of rupees which can further be enhanced to such amount as the central government may, by notification, determine;(ii) provide sovereign guarantee to the policies of the life insurance corporation tothe extent to be determined by order, by the central government from time to time;(iii) allocate ninety per cent or more of such surplus, as the central government mayapprove, for the life insurance policy-holders of the life insurance corporation and to credit such percentage of remaining surplus as the central government may approve to a separate account maintained by the life insurance corporation, to be utilised for such purpose as the  central government may determine, and pay the remainder as dividend;(iv) empower life insurance corporation to make regulations in respect of terms andconditions of the agents5 the bill seeks to achieve the above objectivesnew delhi;pranab mukherjeethe 15th july, 2009 president's recommendation under article 117 and 274 of the constitution of india————[copy of dono h 12018/2/2009-ins, iv dated the 23rd july, 2009 from shri pranab mukherjee, minister of finance to the secretary-general, lok sabha]the president, having been informed of the subject matter of the proposed bill life insurance corporation (amendment) bill, 2009 recommends under clause (1) of article 117 and clause (1) of article 274 of the constitution the introduction of the bill in lok sabha financial memorandumclause 2 of the life insurance corporation (amendment) bill, 2009 seeks to raise the minimum capital of the life insurance corporation of india from five crore  of rupees to hundred crore of  rupees which may be enhanced to such amount as the central government may, by notification, determine the bill, if enacted, will involve an enhancement of share capital by ninety-five crore of rupees to be provided by the government of india  after due appropriation made by parliament, by law, for the said purposethe provisions of the bill do not involve any other recurring or non-recurring expenditure memorandum regarding delegated legislationclause 9 of the life insurance corporation (amendment) bill, 2009 proposes inter alia to amend section 49 of the life insurance corporation act, 1956 which confers powers upon the life insurance corporation to make regulations under that section providing for the method of recruitment of employees and agents of the life insurance corporation and the terms and conditions of the agents2 the regulation made under section 49 of the life insurance corporation act,1956, shall be laid, as soon as they are made, before both houses of parliament3 the matters in respect of which regulations may be made are matters of procedure or administrative detail and it is not practicable to provide for them in the bill itself the delegation of legislative power is, therefore, of a normal character annexure extracts from the life insurance corporation act, 1956 (31 of 1956)capital of the corporation5 (1) the original capital of the corporation shall be five crores of rupees provided by the central government after due appropriation made by parliament by law for the purpose, and the terms and conditions relating to the provision of such capital shall be such as may be determined by the central government(2) the central government may, on the recommendation of the corporation, reduce the capital of the corporation to such extent and in such manner as the central government may determine chapter v management18 (1)     offices, branches and agencies(4) there may be established as many divisional offices and branches in each zone as the zonal manager thinks fitactuarial valuations26 the corporation shall, once at least in every two years, cause an investigation to be made by actuaries into the financial condition of the life insurance business of the corporation, including a valuation of the liabilities of the corporation in respect thereto, and submit the report of the actuaries to the central governmentsurplus from life insurance business how to be utilised28 if as a result of any investigation undertaken by the corporation under section 26any surplus emerges, ninety-five per cent of such surplus or such higher percentage thereof as the central government may approve shall be allocated to or reserved for the life insurance policy-holders of the corporation and after meeting the liabilities of the corporation, if any, which may arise under section 9, the remainder shall be paid to the central government or, if that government so directs, be utilised for such purposes and in such manner as that government may determinepolicies to be guaranteed by central government37 the sums assured by all policies issued by the corporation including any bonuses declared in respect thereof and, subject to the provisions contained in section 14 the amounts assured by all policies issued by any insurer the liabilities under which have vested in the corporation under this act, and all bonuses declared in respect thereof, whether before or after the appointed day, shall be guaranteed as to payment in cash by the central government44 nothing contained in this act shall apply in relation to—    act not to apply in certain cases(b) any insurer to whom the insurance act does not apply by reason of the provisions contained in section 2e thereof; 48 (1)    power to make rules(2) in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:—(cc) the terms and conditions of service of the employees and agents of the corporation, including those who became employees and agents of the corporation on the appointed day under this act, 49 (1)    power to make regulations(2) in particular, and without prejudice to the generality of the foregoing power, such regulations may provide for—(b) the method of recruitment of employees and agents of the corporation;(j) the form and manner in which policies may be issued and contracts binding on the corporation may be executed; ————— a billfurther to amend the life insurance corporation act, 1956————(shri pranab mukherjee, minister of finance )gmgipmrnd—3284ls(s-5)—24-06-2009