Bangladesh Bank (BB) Thursday issued revised the rules tightening the conditions for proposed new insurance companies regarding deposition of paid-up capital.

According to the revised rules, the central bank authority has asked proposed news insurance companies to deposit paid-up capital at banks by opening separate bank accounts for a short-term.

The paid-up capital will be free from all kinds of liability and the company could not withdraw any single amount from the respective bank account except for interests or profit, according to the BB rules.

At the very beginning, qualified aspirants of new insurance companies shall be registered with the Insurance Development and Regulatory Authority (IDRA) informing about deposit of paid-up capital, as mentioned in the rules.

However, entrepreneurs of new insurance companies could withdraw money from the account with prior approval of IDRA. But, in this case, the account must be closed and a report with detailed statement of the account shall be sent to the banking regulation and policy department of the central bank within 7 days, the BB rules pointed out.

The BB rules also barred entrepreneurs of new insurance companies to deposit any other money originated from other sources to the specified bank account opened for depositing paid-up capital.

The paid-up capital could be deposited through demand drafts, crossed cheques, payment orders and Bangladesh Electronic Fund Transfer network.

Earlier, Insurance Development and Regulatory Authority (IDRA) requested Bangladesh Bank to allow proposed insurance companies open accounts with the scheduled banks and deposit minimum deposit with the  central bank.

“The IDRA made the request to the BB, as there is a provision under the existing laws to open accounts in the name of any proposed insurance company and depositing money with the central bank,” said an official of the insurance regulator.

On March 28 this year, the IDRA sent a letter signed by its member Naba Gopal Bonik to the general manger of the Banking Regulation and Policy Department of the BB.

As per section 21 of the Insurance Company Act, 2010, the entrepreneurs of any proposed insurance company have to deposit a portion of their respective paid-up capitals of the company with a scheduled bank.

According to the act, minimum paid-up capital for any life insurance company is Tk 300 million while it is Tk 400 million for general insurance. Of the total paid-up capital, the entrepreneurs have to provide 60 percent for depositing with a scheduled bank for seeking registration.

As per the provision, the entrepreneurs have to deposit total Tk 180 million for obtaining linence of a life insurance company and Tk 240 million for general insurance company.