The regulatory body, the Insurance Regulatory and Development Authority (IRDA) has slammed a Rs 50-lakh penalty on SKS Microfinance Ltd. This is the highest ever penalty imposed so far.
The company was penalized for making unauthorized changes in the benefits of policies of its clients while acting as a group policyholder or administrator.
SKS Microfinance had recovered advances extended towards funeral cost of the nominee of the deceased member which was then recovered later illegally from the claim amount paid by the insurer.
"The MFI has (also) levied a charge higher than the premium in violation of rules," IRDA Chairman, Mr. J. Hari Narayan said.
SKS Microfinance had also generated ‘substantial' amount of income under group insurance administrative charges by levying higher charges than usual, IRDA said.