RBS split proves a hard nut to crack

KATHMANDU, SEP 09:
 
Rastriya Beema Sansthan’s ( RBS ) plan to split itself into two entities—one dealing with life insurance business and the other dealing with non-life insurance—has proven to be a tough nut to crack due to various demands put forth by employees’ unions.

The unions have demanded that employees of both the institutions be automatically promoted one position higher and be allowed to subscribe to public shares issued by non-life insurance.

As per the RBS ’ plan, the life insurance business will function under the RBS Act, while the non-life business will come under the Company Act. Following the split, the non-life insurance entity will issue 30 percent public shares and 5 percent of which will be allocated to the employees.

While the entity dealing with life insurance is not entitled to issue pubic shares, the unions are demanding either all the existing employees be allowed to subscribe to the shares issued by non-life entity or both the entities be brought under the Company Act.

Putting forth the demands, the unions have been barring RBS Administrator Ram Bahadur Khadka from using his official vehicle for the last three months. Khadka said he has also been barred from performing his official duty.
“Ever since I submitted the split proposal to the Finance Ministry, the employees’ unions have been barring me from performing my duty, saying that I submitted the proposal without holding consultations with them,” he said.
However, RBS Employee Union’s central committee member Tulak Prasad Dhungana said the administrator has not been barred from performing his duty, but has been not been allowed to use the vehicle until the demands are fulfilled.
The RBS Board has been refusing to entertain the employees’ demands, saying the existing legal provisions do not allow doing so.
Khadka said following the split, employees from one entity cannot be permitted to get shares of another entity as per the law. “Neither both the entities can be brought under the Company Act as long as the RBS Act is in place,” he said.
The RBS Act is mum over non-life insurance business. Despite the introduction of the Insurance Act as an umbrella Act, the RBS Act is still in place.

The RBS management, however, is ready to ensure that there would not be any downgrade in the facility the employees are currently receiving. In its proposal, the management has told the Finance Ministry that the facilities the employees are enjoying will not be slashed, the existing employee service bylaw will prevail for both the entities, and the employees will be allowed to choose between life and non-life insurance entities.
After repeated directions from the Insurance Board, the RBS management finally decided to split itself into two entities.

As RBS has been maintaining separate records of life and non-life businesses, Khadka said there would not be any problem in separating two businesses.

Although its transactions have not been audited for the last seven years, Khada said it would not make big difference. “As life and non-life businesses have separate records, auditing can be done after the split,” he said.
As per the RBS proposal, the non-life insurance entity will have a paid-up capital of Rs 350 million. Currently, it has a paid-up capital of 190 million. “We can fulfill the remaining capital requirement by issuing bonus shares,” he said.
Following the split, the government’s share in the non-life entity will come down to 41.3 percent existing 47 percent, according to the proposal.

The RBS has also asked the government to take necessary decisions from the Cabinet for issuing public shares and other areas where a Cabinet decision is must.

Source: The Kathmandu Post