KATHMANDU, April 1: The Insurance Board (IB) has asked the insurers to either increase their capital base or go into a merger if they fail to do so.
At a time when the insurers have been reluctant to raise their capital base despite the directives of the regulator, the IB has started pressing the companies concerned to go into a merger. The IB in this regard called the operators of insurance companies for a meeting on Thursday.
IB Chairman Surya Prasad Silwal said the regulator took the decision citing an expanding insurance business across the country. Silwal expressed his commitment that they will not issue licenses to new firms for now and asked the insurers to submit plans of increasing their paid-up capitals within the prescribed time period.
Last week, the IB board decided to raise the paid-up capital of insurance companies. With the new provision into effect, life insurers will have to increase their paid-up capital to Rs 5 billion from the existing Rs 2 billion.
Similarly, non-life insurers will have to raise their capital to Rs 2.50 billion from Rs 1 billion. The companies have been asked to come up with plans to raise their capital base within the next 30 days.