Kathmandu: The Insurance Board(IB) has doubled the minimum capital requirement of life and non-life insurance companies. A meeting of the Board of Directors of the IB held today has decided to increase the minimum paid-up capital of life insurance companies to Rs. 5 billion and non-life insurance companies to Rs. 2.5 billion.
Earlier the minimum paid up capital requirement of the Life Insurers and Non-life Insurers were Rs.2 billion and Rs.1 billion repsectively.
The IB has directed all insurance companies to submit capital plan within 30 days to increase the minimum paid-up capital.
Chairman Surya Prasad Silwal said that initially the capital plan has been asked from the companies and further directions will be issued based on the same.
The IB has given a deadline of Chaitra end of 2079 to meet the minimum paid-up capital. During this period, insurance companies will be able to complete through bonuses, rights shares and mergers, said Chairman Silwal.
Insurers have criticized the unexpected move from the regulatory authority. An insurer commented that recently the Directives on Risk Based Capital has been introduced and it has been planned that all insurers will manage their capital based on the risk they bear by the year 2084. Again, on which ground the regulatory authority has made today’s controversial decision?
Some other insurers have commented that as the IB’s Board could not succeed to issue license to new insurance companies, it has used the capital increment plan as the means to serve their vested interest.