Bangladesh and the World Bank (WB) are set to sign a US$ 65 million loan agreement in the coming weeks to enhance the capacity of the insurance regulator and state-owned insurance corporations, according to the global lender.
The project named 'Insurance Sector Development project' is likely to be launched in September next and be completed in February 2023, a source concerned said.
"The WB will give loan to the project, but the deal has not been finalized yet. In this connection, a WB mission visited Bangladesh from March 5-8 last," an additional secretary of Economic Relations Division (ERD) told the FE.
The project was already approved by the National Evaluation Committee (ECNEC) chaired by the prime minister in February 2018 and the project was approved by the board of directors of WB in March 20, 2017.
"The project aims at increasing insurance coverage, consumer protection and enhancing the efficiency of the insurance market," a WB letter reads.
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.
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 financial institutions division (FID) 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, a senior official of FID said.
The proposed components of the project are: improving the capacity of the Insurance Development and Regulatory Authority (IDRA) and Bangladesh Insurance Academy (BIA), and modernization, strengthening and increasing the efficiency of the state-owned insurance corporations.
The revised total budget for the project will be US$ 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.
The closing date of the IDA credit is August 22, 2022.
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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