India's biggest insurer LIC has finally received green signal from the insurance regulator to operate in Bangladesh, allowing the company to expand its international footprint, an official said.
Founded in 1956, the Mumbai-based Life Insurance Corporation of India (LIC) got the licence on May 31 under which it will have controlling stakes in its potential local suitor.
LIC had applied for operating licence in Bangladesh in 2013, but the Insurance Development and Regulatory Authority (IDRA) rejected its application on different grounds, notably on equity-related problem with its local partner.
But after rejection by the IDRA, the Indian insurer applied for review of its application in 2014. And the IDRA took necessary steps later.
"We've given consent letter to the local representative in Dhaka (of LIC)," said an IDRA spokesperson.
However, there is still difficulty on the joint-venture as its previous local partner Pioneer Insurance is no more with the LIC.
The Indian state-owned insurance firm, which is legally obliged to start its operation by December, is now looking for a local partner, the official said.
The IDRA will hand over the licence to the LIC Saturday at a function to be held at the Prime Minister's Office (PMO).
The LIC chairman SK Roy is expected to meet with IDRA officials tomorrow (Friday).
The company's paid up capital will be Tk 1.0 billion under a new requirement for attracting renowned foreign life insurance companies.
The IDRA revised the paid-up capital requirement in its latest move to attract the foreign investors in Bangladesh's insurance industry.
In 2013, LIC's proposal for operation in Bangladesh with a paid up capital of Tk 300 million was rejected by the IDRA.
Following an appeal last year, the IDRA advised LIC to come up with a revised proposal raising the capital base.
Headquartered in Mumbai, LIC has an estimated asset value of US$250 billion. As of 2013, it had total life fund of Rs.14.33 trillion.
The Oriental Life Insurance Company, the first company in India established in Calcutta in 1818 by Bipin Behari Dasgupta and others and Surendranath Tagore (son of Satyendranath Tagore) had founded Hindustan Insurance Society, which later became Life Insurance Corporation.
If it begins business in Bangladesh, this will be the first overseas operation in the company’s nearly 60 years' of services in India.
The only other foreign insurer operating in Bangladesh is US-based MetLife-ALICO, but it operates as a branch office, not as a registered company.
The IDRA also gave licence to another foreign company Taiyo Summit in 2013, but the authority is not providing operating licence on the grounds of changes in the equities.
The foreign company promised to inject Tk 1.5 billion initially, but later it wanted to build its paid-up capital at Tk 300 million.
But Taiyo did not hold its promise, falling short of its share in its local partner Summit Group.
jasimharoon@yahoo.com
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