Close on the heels of the market regulator Securities and Exchange Board of India getting increased penal powers, Insurance Regulatory and Development Authority said on Friday that it needed more such powers in the wake of "paltry" penalties existing now and that it was opposed to the reported moves to transfer its funds to public accounts.

"What perhaps Insurance Act of 1938 lacks is sufficient penal machinery to take action against defaulters," IRDA chairman N Rangachary told reporters in New Delhi.

He said the Insurance Act of 1938 had become vintage by 2002 and what IRDA was trying to do was to match the Act of 1938 to come up to the level of 2002.

"We have to introduce an appellate forum for purposes of hearing appeals against the orders of the authority," he said, adding that at present the maximum penalties that could be imposed were a paltry Rs 100-1000 depending on the nature of the offences.

"You may laugh at those figures (the penalties) and so we need to have a modern approach," Rangachary said.

Asked about the proposed move to transfer its funds to the public accounts, he asked which regulators' (Sebi and Reserve Bank of India) funds were with public accounts.

Citing that IRDA planned its budget, and its accounts were audited by the Comptroller and Auditor General of India, Rangachary said, "Two years of audit have been conducted so far and we have not been found to be gravely at fault anywhere."

He said the regulator invests the surplus in fixed deposits with the banks.

Citing that there were some views going around that the IRDA was sitting on Rs 2000-5000 crore (Rs 20-50 billion), he said as of now the regulator's fixed deposits with the banks was hardly Rs 45 crore (Rs 450 million).

Lamenting that the government wants this (Rs 45 crore) to be submitted in the public accounts, Rangachary said it would be curtailing the independence of the authority if every time it wanted to go to government for its expenses.

"My independence is affected and cost of transaction will go up," he said.