Kathmandu. The ‘Alternative Development Finance Mobilization Act, 2083’ authenticated by the President on June 26 has opened a new door for the insurance sector to directly contribute to the overall economic development of the country. <\/p>\n
This Act is expected to be a milestone especially for the insurance sector of Nepal in terms of diversifying investment, directly contributing to the national economy and providing attractive and assured returns to the insured. Insurance companies in Nepal are currently mobilizing a huge insurance fund of more than Rs 9 trillion. However, at a time when the returns have shrunk due to low interest rates in banks and financial institutions, the option of investment in the Alternative Finance Development Fund has been opened. Now, the Act provides a strong legal basis for mobilizing large infrastructure projects of national priority. <\/p>\n
The insurance sector has been made an important shareholder with 24 percent share in the capital structure of the Alternative Development Finance Fund established under Chapter 3 of the Act. The fund has an authorized capital of Rs 100,000 and an initial paid-up capital of Rs 25 billion. Of this, the insurance sector will immediately get promoter share ownership worth Rs 6 billion. <\/p>\n
This act will be the main medium to connect the life insurance fund of more than Rs 8 trillion and the rapidly growing non-life and reinsurance fund into the mainstream of nation building. As per the provisions of the Act, insurance companies will invest in debentures issued by the Government of Nepal or international financial institutions under full or partial guarantees, while the investment will be secured as well as national benefits. <\/p>\n
With the mobilization of insurance fund and retirement fund, the situation of dependence on foreign loans for big projects will also end to some extent. It is believed that the operation of infrastructure projects of more than Rs 1 billion will create employment opportunities in the country and make economic activities dynamic. <\/p>\n
According to Section 14 (j) of the Act, it will be easier for the insurance sector to calculate the direct contribution of the insurance sector to the environmental protection as the investment will be implemented in the reduction of climate change risk and sustainable development. <\/p>\n
According to the monthly report of the Nepal Insurance Authority, the total insurance premium collection and fund size are increasing by double digits annually. In such a situation, as the traditional areas of investment are shrinking, the Alternative Finance Act has provided an outlet to manage the liquidity added to the insurance market. <\/p>\n
The Alternative Development Finance Mobilization Act, 2083 is not only a legal document but also a basis for converting the insurance sector capital into productive national assets. It is necessary for the Insurance Authority to make timely amendments in the investment guidelines of the insurers and make a relaxed and incentivized provision allowing insurance companies to make a certain percentage (such as 5 to 10 percent) of the total fund in alternative financial instruments, bonds and self-capital funds to be issued under this Act.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The ‘Alternative Development Finance Mobilization Act, 2083’ authenticated by the President on June 26 has opened a new door for the insurance sector to directly contribute to the overall economic development of the country. This Act is expected to be a milestone especially for the insurance sector of Nepal in terms of diversifying investment, […]<\/p>\n","protected":false},"author":5,"featured_media":142805,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45060,45067,45159],"tags":[],"class_list":["post-305065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-corporate-en","category-important-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=305065"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305065\/revisions"}],"predecessor-version":[{"id":305066,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/305065\/revisions\/305066"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/142805"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=305065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=305065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=305065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}