Only four out of the 38 insurance companies in Nepal have to date increased their paid-up capital as ordered by the Insurance Board (IB).
The rest look like they are unlikely to be able to meet this goal in the two and a half months remaining, before the deadline expires to comply with the capital requirement, reports Kathmandu Post.
In March 2017, the IB told life insurance companies to raise their paid-up capital to at least NPR2bn ($17m) and non-life insurers to raise it to NPR1bn by mid-July 2018. Currently, the paid-up capital requirements for life and non-life insurers are NPR500m and NPR250m respectively.
So far, Nepal Life Insurance among the 18 life insurers, and Himalayan General Insurance, Shikhar Insurance and Neco Insurance among the 20 non-life insurers are the only companies that have fulfilled the requirement.
The IB had extended the deadline by six months to allow the others more time to comply. The new deadline is 15 January 2019.
IB officiating executive director Raju Raman Poudel said 34 insurers have yet to increase their paid-up capital . “All these companies have submitted their capital plans, but not one has met the requirement despite the extra time given to them,” he said.
The IB has said repeatedly that it will force the merger of insurers which do not boost their capital by the extended deadline.
The regulator issued a directive on mergers and acquisitions some five years ago, but the insurance sector has seen no amalgamation to date. Last year, the board granted new licences for nine life insurance and three non-life insurance companies in a bid to increase market penetration.