The regulatory body is allowing right issue of those life and nonlife insurance companies that could not meet minimum paid-up capital within given time.
As per the direction of NIA, life insurance companies were required to meet minimum paid-up capital of Rs 5 billion and non-life insurance companies were required to meet minimum paid-up capital of Rs 2.50 billion by the end of the last FY.
However, most of insurance companies couldnot meet the minimum paid-up capital by the stipulated time.
The latest data of NIA shows that only seven companies including three life and four non-life insurance could meet the minimum paid-up requirement.
Among life insurance, Nepal Life, Himalayan Life and National Life have met the minimum paid-up capital while among non-life insurance, IGI Prudential Insurance, Siddhartha Premier Insurance, Shikhar Insurance and Sagarmatha Insurance have met the minimum paid-up capital of Rs 2.50 billion.
Based on the data, eleven life and ten non-life insurance are yet to meet the paid-up capital. NIA is preparing to allow 30-35 percent right issue to the joint entity of merged insurance companies.
Raju Raman Poudel, Executive Director of NIA said that the right issue is the last option for companies to meet the minimum paid-up capital, thus, NIA is discussion about allowing 30-35 percent right issue to the merged entities.
If the companies fail to meet the minimum paid-up capital even after right issue, they will have to distribute bonus share to meet it.
Earlier, NIA approved right issue of Life Insurance Corporation (LIC) Nepal and NLG Insurance.
LIC Nepal is set to issue 88 percent right issue of its paid-up capital of Rs 2.65 billion which is 2.33 billion. The paid-up capital of the company will reach Rs 4.98 billion after the right issue.
Meanwhile, NLG Insurance is set to issue 66 percent right shares of its paid-up capital of Rs 1.45 billion. Its paid-up capital will reach Rs 2.42 billion after the right issue.
The unmet capital then will be met through stock dividend distribution.
