Govt against simultaneous running of general, Islamic banking
Wednesday, 9 September 2009
FE Report
The government is set to overturn the existing provision that allows simultaneous operation of conventional and Islamic banking by financial institutions, Finance Minister AMA Muhith said Tuesday.
"We are going to abandon the provision that allows banks to run both conventional and Islamic banking at the same time," Mr. Muhith said during his meeting with a delegation of Bangladesh Insurance Association (BIA), led by its chairman BIA Chairman AKM Rafiqul Islam, at the farmer's Sher-e-Banglanagar office.
The conventional banks, especially that are operating Islamic banking with prior permission, will be given some time for readjustment after the amendment comes into force, he observed.
The finance minister's observation came in response to a BIA's appeal for amending the provision of the proposed insurance act so that any insur can operate both conventional and Islamic insurance business simultaneously.
Mr. Muhith was also critical of yet another proposal for establishing an 'insurance ombudsman'
Citing the existing Tax Ombudsman, the finance minister said: "The output of the tax ombudsman is zero, but its cost is enormous,"
The Chairman of Jatiyo Sangsad (JS) -- Parliamentary Standing -- Committee on Finance Ministry AHM Mustafa Kamal at a recent discussion meeting with the BIA had said that his committee would propose to create an ombudsman for settlement of disputes over insurance claims.
The JS Body is now scrutinising two insurance bills -- The Insurance Act 2009 and The Insurance Regulatory Authority Act 2009, placed earlier by the finance ministry before the parliament for enactment.
Responding to a query, Mr Muhith said the enactment of the proposed insurance acts largely depends on the availability of the JS body's reports on the bills.
"The proposed insurance bills are to be passed in the current session of the parliament provided the JS body submit their reports to this effect," the finance minister said, adding the current session will be brief in nature.
During the meeting the BIA delegation put forward a number of amendments to the proposed insurance acts.
Among the proposals, the BIA stressed the need for withdrawal of the proposed provision that bars directors of insurance companies from becoming directors of banks and financial institutions, increase of the number of insurance companies' directors to 20 from the proposed 15 and exemption of the provision of company's operating expenditures from that of their required solvency margins.
Also terming the required paid-up capital, which has been proposed to be Tk 300 million from the existing Tk 75 million for life insurers and that of Tk 400 million from Tk 150 million for non-life insurers, 'big increases', the BIA suggested that the insurers should be allowed at least 10 ten years to comply with the enhanced paid-up capital.
The association also demanded withdrawal of the provisions requiring the insurers to get registered under the proposed new laws and exemption of their annual renewal fees, as is applicable for the country's banks and financial institutions.
The BIA leaders also suggested that the proposed restrictions on insurers' operating expenditures should go as a new promotion of mandatory 'solvency margin' has been incorporated in the proposed insurance act.
The Association also urged the government to withdrew a provision in the proposed new law, under which decisions about any disputes by the authorities concerned cannot be challenged even in the court.
Former BIA Chairman, and Managing Director and CEO of the Green Delta Insurance Company Nasir A Chowdhury, among other executive members of the association, were present at the meeting.
The government is set to overturn the existing provision that allows simultaneous operation of conventional and Islamic banking by financial institutions, Finance Minister AMA Muhith said Tuesday.
"We are going to abandon the provision that allows banks to run both conventional and Islamic banking at the same time," Mr. Muhith said during his meeting with a delegation of Bangladesh Insurance Association (BIA), led by its chairman BIA Chairman AKM Rafiqul Islam, at the farmer's Sher-e-Banglanagar office.
The conventional banks, especially that are operating Islamic banking with prior permission, will be given some time for readjustment after the amendment comes into force, he observed.
The finance minister's observation came in response to a BIA's appeal for amending the provision of the proposed insurance act so that any insur can operate both conventional and Islamic insurance business simultaneously.
Mr. Muhith was also critical of yet another proposal for establishing an 'insurance ombudsman'
Citing the existing Tax Ombudsman, the finance minister said: "The output of the tax ombudsman is zero, but its cost is enormous,"
The Chairman of Jatiyo Sangsad (JS) -- Parliamentary Standing -- Committee on Finance Ministry AHM Mustafa Kamal at a recent discussion meeting with the BIA had said that his committee would propose to create an ombudsman for settlement of disputes over insurance claims.
The JS Body is now scrutinising two insurance bills -- The Insurance Act 2009 and The Insurance Regulatory Authority Act 2009, placed earlier by the finance ministry before the parliament for enactment.
Responding to a query, Mr Muhith said the enactment of the proposed insurance acts largely depends on the availability of the JS body's reports on the bills.
"The proposed insurance bills are to be passed in the current session of the parliament provided the JS body submit their reports to this effect," the finance minister said, adding the current session will be brief in nature.
During the meeting the BIA delegation put forward a number of amendments to the proposed insurance acts.
Among the proposals, the BIA stressed the need for withdrawal of the proposed provision that bars directors of insurance companies from becoming directors of banks and financial institutions, increase of the number of insurance companies' directors to 20 from the proposed 15 and exemption of the provision of company's operating expenditures from that of their required solvency margins.
Also terming the required paid-up capital, which has been proposed to be Tk 300 million from the existing Tk 75 million for life insurers and that of Tk 400 million from Tk 150 million for non-life insurers, 'big increases', the BIA suggested that the insurers should be allowed at least 10 ten years to comply with the enhanced paid-up capital.
The association also demanded withdrawal of the provisions requiring the insurers to get registered under the proposed new laws and exemption of their annual renewal fees, as is applicable for the country's banks and financial institutions.
The BIA leaders also suggested that the proposed restrictions on insurers' operating expenditures should go as a new promotion of mandatory 'solvency margin' has been incorporated in the proposed insurance act.
The Association also urged the government to withdrew a provision in the proposed new law, under which decisions about any disputes by the authorities concerned cannot be challenged even in the court.
Former BIA Chairman, and Managing Director and CEO of the Green Delta Insurance Company Nasir A Chowdhury, among other executive members of the association, were present at the meeting.