Insurance Board instructs insurers not to offer cash dividends

Kathmandu: The Insurance Board(IB) has instructed the insurance companies not to offer cash dividends to their shareholders. The regulatory authority has directed life and non-life insurance companies to focus on offering bonus shares rather than cash dividend. Chairman of the IB, Surya Prasad Silwal informed that the IB has instructed the insurance company not to pay cash dividend as it is preparing a guideline on risk based capital(RBC).

He informed that the companies have been requested to increase their capital through bonus shares as the risk is increasing every year. As the IB is conducting a study on RBC in collaboration with the World Bank Group, it has instructed the insurers to get prepared accordingly.

Since the directive was issued, companies have to decide their capital on the basis of risk. The IB has requested to increase the capital through bonus shares from now on instead of right shares or cash dividends. Once the insurers get enough capital through bonus shares then only they will be allowed to offer right shared to their shareholders.

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