X is an individual, non-Indian, non-citizen and non-resident of India and controls a group of organizations engaged in the financial sector located outside India. He intends to set up a life insurance company in India an

(xi) The understanding between X and the Indian promoter to invest 10% of the net premium every year in group companies owned and controlled by X will not be allowed as these fall under Prohibited investments as per section 27A(5) and 27C of the Insurance Act, 1938. These are companies outside India and hence investments in these companies are not allowed. If these companies were in India the total limit for investment in such companies is set at 5% of the aggregate funds of the insurer. Thus based on our observations, the terms and conditions of the understanding have to be reviewed and revised to meet the requirements of the Insurance Act, 1938 and the IRDAI provisions to get the certificate of registration for Life Insurance Business in India.