Bangladesh and the World Bank (WB) are set to sign a US$ 65 million (about Tk 5.19 billion) loan agreement soon to enhance the capacity of the insurance regulator and state-owned insurance corporations, officials said.
Besides, the global lender is set to deliver a final report on Islamic Banking Supervisory and Regulatory Frameworks Technical Assistance project, they said.
A WB mission is supposed to visit Bangladesh from September 30 to October 06.
The main objective of the mission is to work with the Bangladesh Bank on delivery report for the Islamic Banking Supervisory and Regulatory Frameworks Technical Assistance and follow up on the approval by the authorities of the Bangladesh Insurance Sector Development project that was approved by the board of directors of WB in March this year, according to a WB document.
"The WB will give loan to the Insurance Sector Development project, but the deal has not been finalized yet. In this connection, a WB mission will visit Bangladesh soon," Additional Secretary of Economic Relations Division (ERD) Mahmuda Begum told the FE.
During the visit, a discussion will also be held on Islamic Banking Supervisory and Regulatory Frameworks Technical Assistance project that is new, she said.
The mission will meet the finance ministry, the Insurance Development and Regulatory Authority (IDRA), and financial institutions during the visit.
"The project aims at increasing insurance coverage, consumer protection and enhancing the efficiency of the insurance market," a WB letter reads.
Earlier, the WB had discussions on the funding with the Bank and Financial Institutions Division (BFID) of the finance ministry and the IDRA of Bangladesh.
The project was expected to be launched in March this year and be completed in February 2023, sources said.
The objective of the project is to strengthen the institutional capacity of the sector's regulator and insurance corporations for enhancing insurance coverage in the country, a high official of the finance division told the FE.
He said the finance minister has already approved the draft DPP (Development Project Proposal) of the project titled "Bangladesh Insurance Sector Development Project".
Earlier, the project's title was 'Bangladesh Insurance and Private Pension Market Development' and later revised to remove a component of private pension market.
The insurance sector is under supervision of the BFID while the pension matters come under the finance division. So, the private pension component has been separated through discussion between the two divisions of the finance ministry.
It has been done mainly to keep the project focused only on the insurance sector while a separate initiative would be taken later for the development of the private pension market, a senior official of the BFID said.
The proposed components of the project are: improving the capacity of the IDRA and Bangladesh Insurance Academy (BIA), and modernisation, strengthening and increasing the efficiency of the state-owned insurance corporations. The revised total budget for the project will be $ 80 million (about Tk 6.38 billion).
The project will be financed from International Development Association (IDA) loan of US$ 65 million and contribution of $ 15 million by the government.
According to the DPP, some US$ 45 million will be spent on strengthening and improving the capacity of the state-owned insurance companies while US$ 30 million on modernization of BIA and IDRA, and US$ 5.0 million on implementation and monitoring purposes.
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