State-run Jiban Bima Corporation (JBC) has long been hamstrung by a huge capital shortfall, making it difficult for the entity to carry out operations efficiently, officials said.
The capital deficit of the JBC is now Tk 250 million. It has only 16.66 per cent or 50 million capital against required paid up capital.
As per the section 5(1) under the Insurance Corporation Act, 2019, the State-owned JBC has a provision to increase its paid-up capital to 30o million.
The risk bearing capacity of the life insurance corporation is lower due to low paid-up capital, according to a document seen by the FE.
The corporation has requested the fiancé ministry to help strengthen its capital base. But, the ministry is yet to decide on it.
When contacted, a senior official at the finance division said: "We're scrutinising the JBC proposal."
According to the provisions of section 15(2) of the insurance Corporation Act, 2019, some 95 per cent of the surplus fund is deposited to the policyholders and the remaining 5.0 per cent to the government treasury through the annual activities of the JBC through actuarial valuation.
As a result, it is not possible to meet the capital shortfall from the surplus funds or by alternative means, suggests the document.
The JBC deposited Tk 509.5 million to the government's treasury as dividend after 19 bi-annual valuations from 1993 to 2018.
Earlier, the then finance minister had agreed to provide the fund as equity to meet the shortfall. An executive of the corporation said the JBC has been facing the capital shortfall for a long time. It would be better for the agency if it gets funds from the government.
According to the JBC's latest data, the life fund of Jiban Bima has shot up to Tk 26.36 billion in 2023, which was only Tk 218.3 million in 1973.
JBC has so far paid Tk 15.81 billion against various claims.
The JBC's investment has reached Tk 16.71 billion in 2023 from only Tk 197 million in 1973. It has the largest network all over the country.
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