September 6: Rastriya Beema Company, the one and only state-owned non-life insurance company of Nepal, is struggling to meet the paid-up capital limit fixed by the Insurance Board.

As per the directive of the Insurance Board, non-life insurance companies need to raise their paid-up capital to Rs 2.5 billion by mid-April. Currently, the paid-up capital of the Rastriya Beema Company is Rs 266.63 million. The company is in need of an additional Rs 2.23 billion to meet the requirement of the Insurance Board, the regulatory body of the insurance sector.

Rastriya Beema Company split from its parent company Rastriya Beema Sansthan, the state-owned life insurance company, on August 3, 2014 and  started providing non-life insurance service. The company has not been able to distribute cash dividend due to its failure to approve the audit report of last fiscal year.

Other non-life insurance companies have already prepared plans to meet the paid-up capital requirement set by the Insurance Board but this company is yet to take any decision.

The Insurance Board has approved the audit report of this company till 2015/16 on condition that it cannot distribute cash dividend. Spokesperson of the Insurance Board Raju Raman Poudel says that the company can distribute cash dividend only after the audit report up to last fiscal year gets approved.

“The company cannot get off the hook just because it is a state-owned company,” said Poudel, adding, “It must maintain the paid-up capital fixed by the board just like other companies.”

Spokesperson Poudel informed New Business Age that the company will face action if it fails to maintain the paid-up capital set by the board within the given timeframe.

“How can we tell other companies to meet the paid-up capital requirement if the state-owned company disobeys the directive?” questioned Poudel. He said that the government must be serious towards this issue.

The company’s Acting CEO Subash Koirala says that they are ready to follow the instructions of the Insurance Board. However, he said that he cannot say anything about increasing the capital at the moment because they are awaiting the response from Finance Ministry which owns the company.

Koirala said that the company has sought the view of the Finance Ministry in this regard but has not got any response from the ministry.