Rastriya Jeevan Beema Company Struggles for Capital Amidst IPO Plans and Ministry Hesitation

The Rastriya Jeevan Beema Company Limited (RJBCL) faces financial hurdles as the Ministry of Finance (MoF) denies an increase in share capital, hindering the company's plans to issue an Initial Public Offering (IPO). The company is also grappling with the challenge of conducting a long-overdue audit.

Despite guidelines mandating life insurance companies to maintain a minimum paid-up capital of 5 arba, RJBCL sought additional capital from its shareholders. The Ministry of Finance, holding 27% of shares, declined the company's request for an additional capital injection of 1.35 arba rupees, leading to difficulties in reaching the specified paid-up capital. Nepal Rastra Bank has 45%, and Nepal Bank has 16% shares in RJBCL. 

The company, which collected about 3.65 arba rupees from the shareholders, Nepal Rastra Bank and Nepal Bank, was unable to meet the minimum capital as it did not receive the 1.35 arba rupees it was supposed to receive from the Ministry of Finance.

Efforts to secure repayment capital from the upcoming budget are underway, as Bhola Nath Ghimire, the company's information officer, confirms. However, if the Ministry of Finance continues to deny the capital increase, the company risks falling short of the Nepal Insurance Authority's mandated minimum paid-up capital of 5 arba rupees.

Previously, the Ministry's refusal prompted the company's transformation from the Rastriya Beema Sansthan to the Rastriya Jeevan Beema Company with a paid-up capital of 18.10 crores rupees. Now, as a public company eyeing an IPO, the Rastriya Jeevan Beema Company has sought a second increase in capital from the Ministry, encountering challenges in both securing funds and completing the long-overdue audit.

The IPO issuance requires the company to submit audit details to the Securities Board, but the last audit was conducted ten financial years ago. The company's IPO plans hinge on obtaining permission from the Securities Board, which necessitates an audit. While the Ministry hesitates to increase capital, the company, left with no alternative, has appealed for budgetary support.

As the Rastriya Jeevan Beema Company, operating as a public company since Kartik, strives to meet the mandated paid-up capital within one year, the Ministry's reluctance poses a significant challenge. Failure to comply within the stipulated timeframe could lead to the revocation of the company's license under Section 36 of the Insurance Act 2079, with potential directives for merger or amalgamation.

The Nepal Insurance Authority has also instructed the company to update policies, procedures, and employee service conditions, and conduct an actuarial evaluation within specific timelines. Amidst these regulatory requirements, the company's quest for additional capital from the Ministry of Finance intensifies.