IDRA Licensed Shanta Life despite Failing Capital Requirement

Abdur Rahman Abir: Bangladesh’s insurance regulator, the Insurance Development and Regulatory Authority (IDRA), granted a final licence to Shanta Life Insurance Limited even though the company allegedly failed to meet several mandatory legal requirements, including capital, shareholding and security deposit conditions, according to an investigation by Insurance News BD.

Under Bangladesh’s insurance laws, a new life insurance company must have a paid-up capital of Tk 18 crore before receiving a licence. However, the investigation found that Shanta Life had a capital shortfall of Tk 1.5 crore when it received final approval on November 7, 2023.

The investigation also alleged that the company violated shareholding rules by concentrating 72% of its shares in the hands of two families. In addition, funds contributed by 14 proposed directors reportedly originated from only four bank accounts, despite legal requirements that each entrepreneur deposit his or her own share of capital from a personal bank account. The company was also accused of failing to comply with mandatory security deposit requirements.

Questions over Capital Requirements

Documents reviewed during the investigation show that on November 1, 2023, Shanta Life obtained a balance certificate from Prime Bank’s Tejgaon branch stating that Tk 18 crore had been deposited in the company’s account as paid-up capital. On the same day, audit firm Azad Abul Kalam & Co. certified that the company had deposited Tk 18 crore in the bank as paid-up capital.

However, four days later, on November 5, 2023, Prime Bank informed IDRA that it had created a fixed deposit receipt (FDR) worth Tk 16.5 crore in the name of Shanta Life and pledged it in favour of the regulator. Separately, a five-year Treasury bond worth Tk 1.5 crore was purchased on November 2, 2023, in accordance with Section 23 of the Insurance Act and was also pledged in favour of IDRA.

The investigation argues that because Tk 16.5 crore was placed in an FDR and Tk 1.5 crore was invested in Treasury bonds pledged in favour of IDRA, Shanta Life did not maintain the full Tk 18 crore as freely available paid-up capital and therefore did not meet the statutory requirement before receiving its licence.

Financial statements for 2024 and 2025 reportedly show paid-up capital of Tk 18 crore, while also recording Treasury bonds of Tk 1.55 crore and FDR investments of Tk 16.50 crore.

Under Sections 21 and 23 of the Insurance Act 2010, insurers are required to maintain Tk 18 crore as paid-up capital and separately purchase and pledge a security deposit of Tk 1.5 crore in government securities in favour of IDRA. The law also requires promoters to deposit their respective capital contributions in the company’s account and prohibits the withdrawal or encumbrance of those funds without prior written approval from the regulator.

Paid-up capital requirements are intended to ensure that newly established insurers have adequate financial strength to protect policyholders and meet future obligations.

Questions over Sources of Funds

The investigation found that Shanta Life’s capital account, opened at Prime Bank’s Tejgaon branch on November 1, 2023, received the full Tk 18 crore through 14 separate transfers. However, the funds reportedly originated from only four bank accounts.

According to the report, the largest contribution of Tk 9.9 crore came from one account, while another Tk 5.07 crore came from a second account. An additional Tk 1.8 crore was transferred through an RTGS transaction and Tk 1.26 crore originated from a fourth account.

The investigation states that the legal requirement for each entrepreneur to transfer funds from his or her own bank account is intended to verify the source of the money and ensure transparency in the establishment of insurance companies.

Concentrated Share Ownership

Bangladesh’s insurance law limits any individual, family or business group to a maximum of 10% ownership in an insurance company. However, the investigation claims that proposed Chairman Khandaker Munir Uddin and four companies under his control collectively held 47% of Shanta Life’s shares. Another 25% was allegedly controlled by Raiven Hasan, his mother Farzana Hasan and two companies associated with them.

The report states that Khandaker Munir Uddin personally held a 10% stake in Shanta Life and that additional shares were held through Shanta Holdings Limited, Shanta Lifestyle Limited, Shanta Multiverse Limited and Shanta Property Management Limited, all reportedly linked to him and his family members.

Meanwhile, Raiven Hasan and Farzana Hasan, along with Far Asset Management Limited and Nasa Holdings, collectively held another 25% stake in the company, according to the investigation.

The report also states that Nasa Holdings was incorporated on September 4, 2023, after the licensing process for Shanta Life had already begun.

Company Declined to Comment

Insurance News BD reported that it made several attempts to obtain comments from Shanta Life Insurance regarding the alleged irregularities. Written questions were sent to the company’s official WhatsApp number and representatives also visited its office. However, no response was received and company officials reportedly declined to comment.

When asked about the allegations, IDRA’s Media and Communication Consultant and spokesperson, Saifunnahar Sumi, said the licence had been granted by the regulator’s previous administration. She added that if any legal deficiencies or irregularities are identified in the approval process, the current authority will take the necessary action in accordance with the law.