The National Company Law Tribunal (NCLAT) allowed on Thursday banks to declare their IL&FS exposure as NPAs, but restricted them from initiating recoveries process till the moratorium period.
Khuntia spoke about the risk from the rating downgrade of Reliance Capital subsidiaries -- Reliance Home Finance and Reliance Commercial Finance. "There is a set procedure which will be followed. From the initial glance I find there is not too much of exposure to these two companies", he said.
Khuntia, who was speaking at the sidelines of a FICCI event in Mumbai, expressed concern about corporate governance standards in insurance companies.
“We have seen what kind of turmoil has happened in the NBFC sector but I am confident that insurance industry will not have that kind of a problem. In fact, insurance industry should provide stability in times of economic turmoil”, Khuntia said.
He also outlined a number of initiatives that the insurance regulator is planning to undertake.
The Irdai plans to move to a risk-based capital regime, dropping current solvency-based rules that do not assess whether the capital held is adequate enough for the risks inherent in the insurance business.
“This will be a good self-regulating mechanism so that insurance companies manage their risk well and use their capital productively,” he said.