The board said that the step is taken after the companies failed to maintain the paid-up capital for the third time.
The board of directors meeting of IB held on July 22 decided to discontinue time extension for capital increment. According to Chiranjibi Chapagain, IB has decided to demand written clarification from four different types of insurance companies.
The companies including Rastriya Beema Sansthan, Rastriya Beema Company that has not audit its financial report for a long time, companies with foreign investment and private insurance companies.
As per IB, Rastriya Beema Sansthan, the government owned insurance company has its own Act. IB concluded that it does not have the authority to direct the company to increase capital before the implementation of the Insurance Authority Act.
Similarly, the board directed Rastirya Beema Company to conclude auditing of FY 2075/76. IB will take a decision after analyzing the audit reports of the company.
Likewise, the board is barring insurance companies with foreign investment from announcing dividend and profit repatriation.
Moreover, the board will penalize private insurance companies under subsection A of section 12 of the Insurance Act 2049 if the clarification given is unsatisfactory.
Till date, life insurance companies including Met Life, Surya Life Insurance, Gurans Life Insurance, Prime Life Insurance and Rastriya Beema Sansthan and non-life insurance companies including United Insurance, NLG, Prudential, Lumbini, Rastriya Beema Company, Oriental and National Insurance have not met the minimum paid-up capital requirement as per IB directive.