New India Assurance chairman suspended over credit insurance irregularities
17 Aug 2011
M Ramadoss, chairman of New India Assurance Company, has been suspended by the government over charges of irregularities in the distribution of credit insurance cover to Paramount Airways during his tenure as chairman and managing director of Oriental Insurance Company.
News reports quoting a senior government official said Ramadoss had been placed under suspension on account of proceedings against him. G Srinivasan, currently heading United India Insurance, would take additional charge of New India Assurance for the time being, he added.
The CBI leveled allegations against Ramadoss of entering into a criminal conspiracy with Paramount officials for providing credit insurance cover to the airline. This was in violation of the existing rules and regulations of the Insurance Regulatory and Development Authority (IRDA).
Credit insurance is a guarantee by an insurer to cover payment of dues by a corporate in case default.
Oriental Insurance provided credit insurance of Rs14-25 crore to Paramount Airways in 2008-09 toward multiple bank guarantees to cover fuel purchases.
The carrier had availed a loan of about Rs400 crore from five major banks to make payments for fuel to oil companies but defaulted in making repayments for the amount.
The five banks approached Oriental Insurance for payment against the credit insurance to the airline.
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