Simultaneous general, Islamic banking won?t be allowed after this fiscal: Muhith; Insurance amendment bill unlikely to be placed in current JS session

Finance Minister AMA Muhith Tuesday said commercial banks and insurance companies wouldn?t be allowed to do a dual banking and insuring business simultaneously on general and Islamic lines.

From this standpoint, he turned down a proposal for allowing insurance companies to do Islamic insurance simultaneously the way commercial banks currently doing banking in both the modes-general and Islamic.

The proposal came from a delegation of Bangladesh Insurance Association (BIA) during a meeting with the Finance Minister in the ERD conference room.

"I'm considering cancellation of the provision for the commercial banks," he told the meeting while rejecting the insurance companies? plea, adding that this would be done under a proposal on amend to the banking companies? law which will take place within this financial year.

Replying to a question as to why he would like to cancel the provision for dual banking, the Minister said: "It was wrong at the initial stage when the two types of business were mixed."

He, however, pointed out that the banks already doing Islamic banking would be given enough time to choose one type of business -- either Islamic or general banking.

At the same time, he said, the insurance companies should also go for one type of their respective business -- general, life or Islamic.

The Finance Minister said the bill on amendments to the Insurance Act 1938, now under a standing committee scrutiny, is unlikely to be placed in the current session of parliament.

"It's a very short session," he told reporters after the meeting.

"The bill will be placed in parliament after getting the committee report," he said, replying to a question whether the bill is going to this session of parliament for passage.

Muhith had placed the bill in parliament on July 9 this year, which was later sent to the Parliamentary Standing Committee on Finance Ministry for vetting.

The BIA delegation, led by its chairman AKM Rafiqul Islam, met the minister to submit corrections to the draft of the amendments as already approved by the cabinet and now under the scrutiny of the Standing Committee.

In response to another submission from BIA to allow one person to be involved in the boards of different organisations, the minister said one person should not be on the boards of different banks, financial institutions and insurance companies.

About a standing-committee proposal for setting up office of Ombudsman for insurance companies, he said it would be a case to waste government resources. "We've a tax ombudsman. The work is zero, but the cost is enormous."

The BIA delegation also requested the Minister to allow a provision in the amendment of the act to give the insurance companies 10-year period to meet the capital requirement -- Tk 40 crore for non-life insurance and Tk 30 crore for life-insurance companies.

The Minister hinted that adequate time would be allowed to meet the capital requirement, but it would be more likely the timeframe for the commercial banks in meeting their capital requirements.

BIA also drew attention of the minister to the fact that unlike other companies, including banks, they have to pay a yearly license fee to renew their licenses, which is ?irrational?.