Life Insurance Corporation of India (LICI) has again applied for joint-venture licence in Bangladesh without fulfilling the criteria under the insurance law.
LICI, India’s largest insurance and investment group, was recently denied licence because of the same reason.
Under the Insurance Act 2010, a foreign company is allowed to hold 60% of sponsors’ portion of shares of the total paid-up capital. But LICI, whose local partner is Pioneer Insurance Company Ltd, has submitted an application with 90% of its sponsors’ shares.
“LICI has failed to follow the law. We won’t give licence anyone violating rules. But we have yet to decide on the Indian company,” said Fazlul Karim, member of Insurance Development and Regulatory Authority (IDRA).
If necessary, the IDRA will appoint counsel to resolve the legal issues that have arisen with the LICI’s licence application, he added.
Fazlul Karim said there is no chance to change any of the information mentioned in the submitted application.
According to sources, the LICI, whose 100% stake is owned by the Indian government, has also not attached required documents with the application.
The documents include, among other things, the written agreement between the sponsors during the formation of the company, declaration of chairman, audit report on paid-up capital and the joint-venture deal.
Sources however said despite the non-fulfillment of requirements, two IDRA members are allegedly active in providing LICI with a licence.
A finance ministry source said the ministry is also against giving licence to LICI as the company has not followed the law.
Bangladesh currently has 62 insurance companies- all but the MetLife Alico of the US are of local investment. Recently, the IDRA issued licences to nine new life insurance and two non-life insurance companies.
The licenced companies are Mercantile Islami Life Insurance Ltd, Taiyo Summit Life Insurance Co Ltd, Sonali Life Insurance Co Ltd, NRB Global Life Insurance Co Ltd, Protective Life Insurance Co Ltd, Guardian Life Insurance Ltd, Chartered Life Insurance Co Ltd, Best Life Insurance and Zenith Islami Life Insurance Ltd.
The two non-life insurance companies are Sikder Insurance and Sena Kalyan General Insurance.
The government is likely to issue licences to more insurance companies by the end of its tenure early next next year.
