Two local firms bought 10% stake at the Indian insurance giant LIC, which may begin its Bangladesh operations at the end of this month, officials said.
The Life Insurance Corporation (LIC) is the second foreign insurer after the US-based MetLife-ALICO, which only has a branch office in Bangladesh and is not a joint venture registered company.
The state-backed LIC controls more than half of the Indian market.
This is the first insurance agency with a huge paid-up capital worth Tk100 crore in the country.
According to the Insurance Act 2010, a life insurance firm should have at least Tk30 crore as paid up capital.
Of the total paid-up capital, LIC holds Tk50 crore, local partners Tk10 crore and the rest is kept for initial public offering.
Local bank Mutual Trust Bank Ltd has 3% stake and business conglomerate SEML Group has 7% at the LIC, according to sources at the Insurance Development Regulatory Authority (IDRA).
Indian and Bangladesh finance ministers are expected to attend the launching ceremony of LIC operation in Dhaka, said an official.
On May 31 this year, the LIC was allowed to start operations as a joint venture entity to be called LIC Bangladesh Ltd with a paid up capital of Tk100 crore.
The approval came nearly two years after the IDRA rejected a LIC proposal to launch its business in Bangladesh with a paid up capital of Tk30 crore.
The IDRA handed over its consent letter to LIC Chairman SK Roy during Indian Prime Minister Narendra Modi’s visit to Dhaka in early June this year.
LIC has been in the insurance business for six decades and is worth Rs15,00,000 crore.
Apart from two state-run insurance companies, Bangladesh currently has 60 insurance companies in private sector, 43 of them being general and 17 life.
Apart from India, the LIC operates in Nepal, Sri Lanka and Singapore. India’s life insurance sector, however, has shrunk in recent years, hit by a wider economic slowdown and a regulatory crackdown following worries over mis-selling.
Insurance experts say LIC’s foray into the country may change landscape of the insurance industry as the Indian company with diversified products often prefers aggressive marketing and hence may grab lion share of the market.
