March 25, 2022 | Investopaper
The Insurance Board has decided to increase the paid up capital of insurance companies. The minimum paid-up capital of life insurance companies has been increased to Rs 5 billion and non-life insurance companies to Rs 2.5 billion, as per the Insurance Board.
Earlier, the minimum paid-up capital was Rs 2 billion for life insurance companies and Rs 1 billion for non-life insurance companies.
The decision to increase the paid-up capital was taken targeting risk-based capital. The board stated that this decision will help in encouraging companies to merge with each other, maintaining appropriate number of companies, maintaining large capital and creating healthy competition.
The insurance companies will have to increase their paid-up capital as directed by Chaitra 2079 BS. They should also submit a plan to increase their paid-up capital to the board within 30 days.
The companies that do not increase their capital within the stipulated time should go for merger. They can also issue rights shares for increasing the paid-up capital.
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