Fearing manipulation, Board leaves out paid up provision from draft Insurance Act

Kathmandu, February 25:

Insurance Board is preparing to bring draft of the new Insurance Act without specifying paid up capital to be maintained by insurance companies. The board has refrained from fixing the required paid up capital saying that it might lead to manipulation in shares of insurance companies.

As per the news published in Nagarik Daily, an official with the Insurance Board said that the decision to not mention the paid up capital in the draft was taken upon the instruction from the Finance Ministry. The official told the newspaper that the ministry was apprehensive about the impact fixing a paid up capital would have on secondary market.  

The ministry’s fear, however, is not unfounded. Earlier, the unconfirmed news about the move requiring life insurance companies to have a paid up capital of Rs 2 arba and non-life insurance companies Rs 1 arba had led to manipulations in the share market.

Officials fear that the decision would create grounds for big investors to exploit small investors.

Insurance Board Director Mr Shriman Karki said the board was preparing to hold discussion among key stakeholders on the draft act. Mr Karki said that the meeting of the stakeholders would be called within 2 days. Karki informed that the last decision on the matter would be taken only after considering the views and suggestion of stakeholders on the draft.