Max India said Max Life and HDFC Life remain committed to the merger and are evaluating various options after the insurance regulator Irdai again expressed reservations on the deal.
In November last year, Irdai had posed reservations on the present form of amalgamation of Max Life and HDFC Life into a single entity to comply with Section 35 of the Insurance Act, 1938.
Section 35 of the Insurance Act, 1938 does not allow the merger of an insurance firm with a non-insurance firm.
"Further to the representations made to the Insurance Regulatory & Development Authority of India (Irdai), the Authority on June 7 reaffirmed its original position regarding section 35 of the Insurance Act, 1938," Max India said in a regulatory filing.
It said: "HDFC Life and Max India remain committed to the merger and evaluating various options."
The scheme of amalgamation proposes merging of insurance business in an agreement between Max Financial Services Ltd (MFSL), its subsidiary Max Life Insurance Company Ltd (MLIC), HDFC Standard Life Insurance Company Ltd (HDFC Life) and Max India.
HDFC Life and MLIC had filed an application seeking in-principle approval of Irdai for the proposed amalgamation scheme on September 21, 2016.
In a complex and tier-structured demerger and merger plan, Max India will amalgamate Max Life Insurance with Max Financial Services.
Subsequently, the insurance business of the merged entity is to be demerged so that it can be transferred to HDFC Standard Life Insurance Company.
As per the proposed scheme, the remaining of the merged entity, i.e., minus the insurance business, will be amalgamated with Max India.
Max Financial Services, promoted by USD 2 billion Max Group, is the holding company for Max Life.