bdnews24.com :
The Life Insurance Corporation of India (LIC) has been cleared by the regulators to do business in Bangladesh.
The move, according to insurers, will intensify the competition in the local market, but benefit clients.
“We have given LIC a letter of consent upon certain conditions. They will be able to start operations once they are fulfilled, “said Bangladesh Insurance Development and Regulatory Authority (IDRA) chief M Shefaq Ahmed.
The Indian state-owned insurance giant will start operations as the joint venture entity LIC Bangladesh Ltd.
Its paid up capital will be Tk 1 billion and LIC will hold half of it.
The rest will be owned by their Bangladeshi partners, which will be raised from the capital market and local entrepreneurs.
In 2013, LIC’s proposal for operation in Bangladesh with a paid up capital of Tk 300 million was rejected by the IDRA.
Following an appeal last year, the IDRA advised LIC to come up with a proposal raising the capital base.
On May 31 this year, IDRA cleared the LIC proposal.
LIC, the market leader in India, has been in the insurance business for six decades and is worth over 15,000 billion Indian rupees.
The only other foreign insurer operating in Bangladesh is US-based MetLife-ALICO, but it operates as a branch office, not as a registered company.
LIC has to be registered as a joint venture company in Bangladesh and then has to transfer its portion of the capital, in this case Tk 500 million, to Bangladesh to commence business.
The IDRA plans to handover its consent letter to LIC Chairman SK Roy during Indian Prime Minister Narendra Modi’s Dhaka visit on Jun 6 and 7.
It has written to the finance ministry seeking its nod for a formal handover in presence of Modi.
Meanwhile, local insurers say that Bangladeshi companies will find them in stiff competition once LIC enters the market.
“LIC is an old company with experienced manpower. They will bring new products in the market, from which the Bangladeshi insurers can learn.
“It will also help the human resource in the sector to develop,” Bangladesh Insurance Association Chairman Ahsanul Islam Tito told bdnews24.com.
“I would say it will have both positive and negative impacts, but the clients will be benefited,” he added.
A total of 77 insurers are operating in Bangladesh now after the regulators cleared 14 new companies in the 2013-14 fiscal.
The Life Insurance Corporation of India (LIC) has been cleared by the regulators to do business in Bangladesh.
The move, according to insurers, will intensify the competition in the local market, but benefit clients.
“We have given LIC a letter of consent upon certain conditions. They will be able to start operations once they are fulfilled, “said Bangladesh Insurance Development and Regulatory Authority (IDRA) chief M Shefaq Ahmed.
The Indian state-owned insurance giant will start operations as the joint venture entity LIC Bangladesh Ltd.
Its paid up capital will be Tk 1 billion and LIC will hold half of it.
The rest will be owned by their Bangladeshi partners, which will be raised from the capital market and local entrepreneurs.
In 2013, LIC’s proposal for operation in Bangladesh with a paid up capital of Tk 300 million was rejected by the IDRA.
Following an appeal last year, the IDRA advised LIC to come up with a proposal raising the capital base.
On May 31 this year, IDRA cleared the LIC proposal.
LIC, the market leader in India, has been in the insurance business for six decades and is worth over 15,000 billion Indian rupees.
The only other foreign insurer operating in Bangladesh is US-based MetLife-ALICO, but it operates as a branch office, not as a registered company.
LIC has to be registered as a joint venture company in Bangladesh and then has to transfer its portion of the capital, in this case Tk 500 million, to Bangladesh to commence business.
The IDRA plans to handover its consent letter to LIC Chairman SK Roy during Indian Prime Minister Narendra Modi’s Dhaka visit on Jun 6 and 7.
It has written to the finance ministry seeking its nod for a formal handover in presence of Modi.
Meanwhile, local insurers say that Bangladeshi companies will find them in stiff competition once LIC enters the market.
“LIC is an old company with experienced manpower. They will bring new products in the market, from which the Bangladeshi insurers can learn.
“It will also help the human resource in the sector to develop,” Bangladesh Insurance Association Chairman Ahsanul Islam Tito told bdnews24.com.
“I would say it will have both positive and negative impacts, but the clients will be benefited,” he added.
A total of 77 insurers are operating in Bangladesh now after the regulators cleared 14 new companies in the 2013-14 fiscal.
