Major decisions to resolve insurance sector problems yet to be executed
Monday, 9 January 2012
Doulot Akter Mala
Major decisions to resolve problems of insurance sector remained unimplemented although a set of concrete decisions were taken in the middle of last calendar year.
Finance Minister AMA Muhith in a recent meeting expressed his resentment over non-implementation of the major decisions by the relevant government agencies, officials said.
He instructed the Bangladesh Bank, the Securities and Exchange Commission (SEC) and the Insurance Development Regulatory Authority (IDRA) to speed up the process of implementation of the decisions.
Banking and financial institution department of the finance ministry (insurance wing) recently forwarded the instructions to the relevant departments.
The unimplemented decisions include preparing new rules, regulations and laws for insurance sector after discussion with relevant departments, simplifying enlisting procedures of insurance companies, tax-benefit for below-taxable earning of insurance companies, increasing profit rates for investors of the Islamic bonds, skilled manpower and assessment of income of insurance companies.
IDRA, BB and SEC failed to do their job relating to insurance sector development. Six major issues which were decided three months ago were placed in the meeting again, working paper of the meeting said quoting the finance minister.
Working paper of the recent meeting, a copy of which was obtained by the FE, said the finance minister felt the necessity of reminding the concerned people of the jobs of the respective agencies to expedite their implementation.
According to the instruction, IDRA and the National Board of Revenue (NBR) will review complaints, raised by the insurance association, on assessment of income of the insurance companies.
According to the insurance law, management expenditure of the insurance companies cannot surpass allowable limit. If any company spends money above the limit, IDRA can impose penalty on them.
Income tax department assesses the non-allowable income as taxable and slaps tax on it.
In a meeting with the finance ministry, insurance companies demanded tax facilities similar to those enjoyed by banks and non-banking financial institutions.
Insurance insiders stressed the need for amendment of the tax law for simplifying assessment of the income of insurance companies.
All insurance companies have to invest 30 per cent in the government securities.
Representatives of the insurance companies said they have to incur financial loss due to poor rate of profit of Islamic bonds. BB offers 3.75 per cent to 4.50 per cent profit for Islamic bonds.
The finance ministry has requested the BB to give opinion on increasing the profit rates on investment in Islamic bonds to 8.0 per cent to 10 per cent as demanded by Bangladesh Insurance Association (BIA).
Insurance companies have introduced 'small insurance' for the poor people. Insurance policy agents for those earn maximum Tk 3,000-4,000 monthly. The NBR cuts 5.0 per cent tax at source on it while most of them have below taxable income.
Major decisions to resolve problems of insurance sector remained unimplemented although a set of concrete decisions were taken in the middle of last calendar year.
Finance Minister AMA Muhith in a recent meeting expressed his resentment over non-implementation of the major decisions by the relevant government agencies, officials said.
He instructed the Bangladesh Bank, the Securities and Exchange Commission (SEC) and the Insurance Development Regulatory Authority (IDRA) to speed up the process of implementation of the decisions.
Banking and financial institution department of the finance ministry (insurance wing) recently forwarded the instructions to the relevant departments.
The unimplemented decisions include preparing new rules, regulations and laws for insurance sector after discussion with relevant departments, simplifying enlisting procedures of insurance companies, tax-benefit for below-taxable earning of insurance companies, increasing profit rates for investors of the Islamic bonds, skilled manpower and assessment of income of insurance companies.
IDRA, BB and SEC failed to do their job relating to insurance sector development. Six major issues which were decided three months ago were placed in the meeting again, working paper of the meeting said quoting the finance minister.
Working paper of the recent meeting, a copy of which was obtained by the FE, said the finance minister felt the necessity of reminding the concerned people of the jobs of the respective agencies to expedite their implementation.
According to the instruction, IDRA and the National Board of Revenue (NBR) will review complaints, raised by the insurance association, on assessment of income of the insurance companies.
According to the insurance law, management expenditure of the insurance companies cannot surpass allowable limit. If any company spends money above the limit, IDRA can impose penalty on them.
Income tax department assesses the non-allowable income as taxable and slaps tax on it.
In a meeting with the finance ministry, insurance companies demanded tax facilities similar to those enjoyed by banks and non-banking financial institutions.
Insurance insiders stressed the need for amendment of the tax law for simplifying assessment of the income of insurance companies.
All insurance companies have to invest 30 per cent in the government securities.
Representatives of the insurance companies said they have to incur financial loss due to poor rate of profit of Islamic bonds. BB offers 3.75 per cent to 4.50 per cent profit for Islamic bonds.
The finance ministry has requested the BB to give opinion on increasing the profit rates on investment in Islamic bonds to 8.0 per cent to 10 per cent as demanded by Bangladesh Insurance Association (BIA).
Insurance companies have introduced 'small insurance' for the poor people. Insurance policy agents for those earn maximum Tk 3,000-4,000 monthly. The NBR cuts 5.0 per cent tax at source on it while most of them have below taxable income.