Life Insurance Corporation (LIC), India's largest life insurer, has finally partnered with two Bangladeshi companies to begin its joint venture business in the country in three months' time.
Of the partners, Mutual Trust Bank, a leading third-generation private commercial bank, has bought a 3 percent stake in LIC's Bangladesh venture, while SEML Group, a fund management company, bought 7 percent shares.
For every 1 percent stake, the Bangladeshi investors had to pay Tk 1 crore.
“This will be our equity investment in LIC Bangladesh Ltd,” said Anis A Khan, managing director of Mutual Trust Bank.
LIC Bangladesh will have a Tk 100 crore paid-up capital. LIC India will own half of the shares in the joint venture, and the remaining 40 percent shares worth Tk 40 crore will be raised from Bangladesh's capital market. Tanvir Ahmed, managing director of SEML Group, Bangladesh, also confirmed that they have bought 7 percent stakes in LIC Bangladesh for Tk 7 crore.
“The procedures are almost complete. We hope to commence operations of the joint venture in a few months,” he said.
Shefaque Ahmed, chairman of the Insurance Development and Regulatory Authority (IDRA), also confirmed the formation of the joint venture.
Previously, Pioneer Insurance, a leading non-life insurance company in Bangladesh, had been working as a local partner of LIC for nearly three years, but the IDRA did not allow Pioneer to be involved in life insurance business.
By teaming up with Pioneer Insurance, LIC first applied to the IDRA in May 2013 for registration.
Quoting the country's insurance laws, the IDRA chairman said a general insurer cannot get involved in the life insurance business. The IDRA handed the consent letter to LIC to operate in the country in June this year in presence of the prime ministers of Bangladesh and India.
It was one of the 22 agreements signed by the two nations during Indian Prime Minister Narendra Modi's visit to Dhaka.LIC will be the second foreign insurance company to operate in Bangladesh after the US-based MetLife-Alico.
Established in 1956, LIC has operations in Nepal, Sri Lanka and Singapore apart from India.