A COMMITTEE was set up in 1993 under the chairmanship of R.N. Malhotra, former Governor of the Reserve Bank of India, to make recommendations for reforms in the insurance sector. The Malhotra Committee recommended introduction of a concept of “professionalisation” in the insurance sector to make out a strong case for paving the way for foreign capital.
In its report submitted in 1994, the committee recommended, among other things, that:
Private players be included in the insurance sector.
Foreign companies be allowed to enter the insurance sector, preferably through joint ventures with Indian partners.
The Insurance Regulatory and Development Authority (IRDA) be constituted as an autonomous body to regulate and develop the insurance sector.