To

All Insurers


Sub : Section 7 Deposit - Reg.


This has reference to the communications received from the Insurers expressing their difficulty in operating the CSGL Account due to the directions issued by the Reserve Bank of India (RBI). The Authority took up the same with RBI and RBI vide its letter IDMD.MSRD.1390/11.80.11(b)/2002-03 Dt. 2nd Oct, 2003 has permitted all Insurers to open two "Gilt Accounts" with any Scheduled Commercial Bank which is listed in the II Schedule of RBI Act, 1934 (2 of 1934) at any location of the insurer's choice.

In this regard, the Authority directs the Insurer as below:

1. The Insurer shall open two "Gilt Accounts" with any Bank listed in Schedule-II of Reserve Bank of India Act, 1934 (2 of 1934) at any location of their choice.

2. The Insurer shall maintain Deposit under section 7 of Insurance Act, 1938 in the form of Approved Securities in one Gilt Account and shall forward the security wise details to the Authority certified by the Banker for such an amount determined in accordance with the provision of Section - 7.

3. Any Deposit into this 1st Account, to comply with the provisions of Section 7 of Insurance Act, 1938, in the form of Approved Securities shall be made by the Insurer, without reference to the Authority.

4. The insurer shall use the other Gilt Account to do transactions pertaining to Government Securities under their Investment Portfolio.

5. Any withdrawal / replacement / transfer of Investment from the Gilt Account maintained for such deposit, will be allowed only with the permission of the Authority. The Banker shall also issue a certificate to the effect that the Securities held in the nature of section 7 deposits, will not be released unless it is consented by the Authority.

6. At the end of each financial year, the Insurer shall certify that the minimum deposit required under section 7 had been maintained at all times during the financial year along with the certificate from the Bank as mentioned on (2) above.



Yours faithfully


C S RAO
CHAIRMAN