The total Investment of Non-Life Insurance is over 63 Billion Rupees, 80 percent in FD

Kathmandu : Non-life insurance companies have invested 63.64 billion Rupees in various sectors including bank and financial institution fixed deposits by the second quarter of the year 2080/81. Even though it has been nine years since the authority issued the investment guidelines, the insurance companies have not been able to diversify their investable funds according to the investment guidelines.

Insurance companies said that they had analyzed the security and risk of invest in other areas and found that there is a risk, so a lot of money is kept in the bank’s fixed deposits.

According to the directives, insurance companies must invest a minimum of 20 percent in savings bonds or bonds of the Government of Nepal, a minimum of 30 percent in term deposits of banks of category ‘A’ and Nepal Infrastructure Bank Limited, a maximum of 10 percent in banks of category ‘C’, 10 percent in ordinary shares of listed public limited companies, 10 percent in real estate business, 10 percent of the ordinary shares of listed public limited companies and preference shares of ‘A’, ‘B’ and ‘C’ class banks as well as financial institutions along with that 20 percent in bonds, 20 percent in secured debentures of listed public limited companies, 10 percent in infrastructure such as agriculture, tourism &water resources, 5 percent in mutual funds and civic investment funds and 5 percent in investment companies.

Although the area for investment has been specified in the guidelines, insurance companies have invested a large amount of money in fixed deposits of ‘A’ class commercial banks. Apart from fixed deposits of commercial banks, insurance companies have not reached the limit in any sector according to the investment guidelines.

 

Non-life insurance companies have invested 80 percent of the total investment in term deposits of ‘A’, ‘B’ and ‘C’ category banks and financial institutions as well as Infrastructure banks licensed by Central Bank of Nepal.

Among the Non-life insurance companies, there is an amount of 48 billion 280 million rupees in fixed deposits of banks of categories ‘A’, ‘B’ and ‘C’. Similarly, Non-life insurance companies have kept 4.34 billion Rupees as reserves in banks and financial institutions of category ‘A’.

Likewise, 1.1 billion Rupees have been deposited in ‘B’ category banks and 3.47 billion Rupees in ‘C’ category banks.

The investment of non-life insurance companies in bonds and listed sectors is very low. Likewise, in the investments in real estate and even in the shares of investment companies, Non-life insurance companies are not seen interested in investing.