Japanese insurance giant -- Taiyo-Life, is making a renewed move to get operating licence for doing insurance business in Bangladesh.
The insurance authority -- IDRA, earlier in 2013 decided in principle to grant operating licence in favour of the Japanese company that had tied up with local power sector giant Summit Group.
But the IDRA later did not give the licence as the Japanese life company had changed its share ratios with its local partners.
However, Taiyo wrote a letter to the finance minister on June 11 last to this effect.
The finance minister had forwarded the letter to the IDRA for taking necessary steps to allow the company to start insurance business in the country.
However, senior executives at the IDRA said they will meet with the Taiyo shortly to discuss the issue.
But they said they will not provide operating licence to the company unless it meets the new conditions in relation to the paid up capital.
"We've given licence to the LIC of India on the basis of new structure of paid up capital. So, the same will be applicable to the Taiyo," said a spokesperson of the IDRA.
According to the new paid-up capital, a foreign joint venture company will have to invest at least Tk 1.0 billion.
Of the Tk 1.0 billion, the foreign company will have to invest at least Tk 500 million as paid up capital. And the local partner will have to invest Tk 100 million. The remaining Tk 400 million will have to be floated for public subscription.
However, the IDRA did not give licence to the company as it had changed share ratios soon after IDRA's decision relating to consent letter.
The IDRA issued letter of consent in favour of the company in July, 2013.
But, it did not apply for licence soon after the issuance of the consent letter.
Rather, it applied for the same to the authority concerned in May last.
In the application in May, Taiyo proposed a new plan of holding nearly 20 per cent stake from its primary plan of holding 57 per cent.
The remaining equity will be held by Summit Group and others.
But the IDRA did not agree with the changed share ratios.
The Taiyo-Summit had deposited Tk 180 million as paid up capital with the IDRA.
The joint venture life insurer named Taiyo Summit Life Insurance Company initially wanted to invest Tk 1.5 billion. And that according to its original plan it will shoot up to Tk 2.5 billion after floating of shares.
An insurance company will have to float shares to the general public after more than three years of commercial operation.
Under the Taiyo's new plan, there will be no representation from Japan side in the board.
Sources at the Insurance Development and Regulatory Authority (IDRA) said there are no provisions for changing shares in three years of approval of licence.
People familiar with the joint venture insurance company told the FE that the Japanese counterpart has backtracked from its primary plan as there are also many changes in the board of Taiyo Life Insurance Company, a life company has roots that stretch back to the late 1800s.
Torching of at least four Buddhist temples in Cox's Bazar in 2012 also disheartened them for big investment in Bangladesh, they said.
jasimharoon@yahoo.com
