Insurance regulator Irdai on Friday, asked leading private sector life insurer ICICI Prudential Life Insurance (IPRU) to take over the business of beleaguered Sahara India Life Insurance (SILIC), with effect from July 31.

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IPRU shall ensure that systems are integrated within a period of one year from the appointed date, Irdai order said.

Embattled Sahara group chairman Subrata Roy had met Irdai chairman to seek more time to resolve the crisis at his life insurance arm on July 24. ICICI Prudential had submitted a valuation report to the regulator to take over the company on the same day.

It was last month that Irdai had appointed an administrator to run the crippled Lucknow-based Sahara Life due to governance-related issues at the company.

Based on the facts reported by the administrator in his report dated June 22, Irdai came to the conclusion that continuation of SILIC to transact life insurance business is not in the interest of the holders of life insurance policies in general, and considered it to be a fit case to transfer the life insurance portfolio of SILIC to some other insurer under section 52B (1) of the Insurance Act, 1938, the order said.

A moratorium period of 15 days is allowed to policyholders to pay renewal premium, and IPRU is given 21 days for settlement of claims after which the servicing of policy holders of SILIC shall be carried on by IPRU unhindered.

IPRU will make available FAQs about servicing of policy holders of SILIC. A dedicated call centre/e-mail ID will be created to handle the concerns of policyholders of SILIC.

According to Irdai, the report of the administrator indicated that there is total failure of the governance system of SILIC and the interests of the policyholders are at stake.

Promoters of the company are no more 'fit and proper', a sum of Rs 78 crore has already been syphoned off in name of security deposits, and the shareholders and board of directors are not keen in recovery plan, the report said.

Moreover, the Irdai report said, the company is mainly surviving on release of reserves. The situation may not continue for long as the new premium of the company has come down significantly.

IPRU shall assume the insurance liabilities of SILIC as per the valuation of the independent actuary as on the appointed date, the order said, adding SILIC shall transfer the assets/investments to IPRU on irreversible basis.

Insurance behemoth LIC was among the few life insurance companies Irdai had approached to take over the assets and liabilities of policyholders of SILIC. However, LIC and all other insurers didn't show any interest except for ICICI Prudential Life Insurance.

Replying to a PTI query, LIC chairman V K Sharma said that "SILIC is a stock-based insurer and we are not interested in taking over such firms".

ICICI Prudential Life today said in a statement that it has received an order from Irdai directing it to take over the assets and policyholder liabilities of Sahara Life Insurance.

The company clarified that this is not a merger between the two companies but purely a transfer of customers to ICICI Prudential Life.

"We are pleased to welcome the new customers to the ICICI Prudential Life family. We would like to assure them of high levels of service and commitment," it said.