RBS tables rejig plan to split life, non-life business

KATHMANDU, Dec 25: The Rastriya Beema Sansthan (RBS) on Tuesday submitted a restructuring plan, to split its life and non-insurance business, to the Ministry of Finance.

The RBS has proposed a paid-up capital of Rs 509 million for its life insurance unit. Similarly, it has proposed forming a separate unit for non-life business with paid-up capital of Rs 350 million.

Preparations are underway to separate non-life business of the state-owned insurer that is in operation for the past five decades. Insurance Act 1992 bars insurance companies from doing both life and non-life business. However, the implementation aspect had remained weak so far.

Krishna Prasad Devkota, joint secretary at the Ministry of Finance (MoF), said the ministry has already studied RBS´s restructuring plan. The proposed capital is sufficient to split life and non-life business of RBS, he added. “Though RBS hasn´t audited its accounts for over a decade, its provisional taxes show it has the required resources to split operation,” added Devkota.

As per the new regulation of Insurance Board (IB), life insurance companies should have a paid-up capital of at least Rs 500 million. Similarly, minimum paid-up capital of non-life insurance companies has been fixed at Rs 250 million.

RBS has proposed allotting 40 percent of shares of non-life unit to the government, 20 percent to the Employees Provident Fund, 10 percent to Nepal Bank Limited and 30 percent to public.

The finance ministry has already analyzed the proposed documents for instituting a company including prospectus, statute and plan for asset liability management, and salary and benefits for employees. RBS has also proposed to allow existing employees to choose which unit they want to join.

RBS had submitted the documents to MoF four months ago. But the finance ministry had not taken any decision on the issue following strong objection by the RBS employees.
Devkota, however, said the finance ministry will soon table the documents to the cabinet for final approval.

Meanwhile, the IB has asked RBS for its actual valuation of three-year period for final approval of audit reports submitted by the latter. RBS has submitted audit reports of 2004/05, 2005/06 and 2006/07 fiscal years to IB for approval.

Ram Bahadur Khadka, chief administrator of RBS, said they would complete valuation and submit report to IB very soon. He also assured that RBS will complete all pending auditing in this fiscal year.

 
(Source: REPUBLICA)