Kathmandu. Life, non-life and reinsurance companies have invested Rs 22.96 billion in promoter shares of the bank in the second quarter of the current FY.

This is 27.15 percent more than the same period last year. In the last fiscal year, the same companies had invested Rs 18.05 billion.

According to the Insurance Authority, life insurance companies have invested Rs 19.39 billion while non-life insurance companies have invested Rs 2.74 billion and reinsurance companies have invested Rs 821.5 million.

Similarly, in the same period of the last FY, the non-life insurance company had invested Rs 1.56 billion in promoter share, while the life insurance company had invested Rs 15.51 billion and the reinsurance company had invested Rs 976.281 million.

Among the 14 life insurance companies in operation, MetLife Life, Citizen Life and Sanima Life have invested Rs 19.39 billion in promoter shares of the bank.

Similarly, out of 14 non-life insurance companies in operation, five companies have not invested while 9 companies have invested Rs 2.74 billion. The non-investors are Rastriya Beema Company, Neco Insurance, Prabhu Insurance, Sanima GIC and Siddhartha Premier Insurance. The rest of the companies have invested in the bank’s promoter shares.

Similarly, two reinsurance companies have invested Rs 82.15 crore. Nepal Reinsurance Company and Himalayan Reinsurance Company invested Rs 596.5 million in the reinsurance company.

Lately, there has been an increase in the number of promoter investors leaving the bank. However, insurance companies have started increasing their investment.

As the return on investment (ROE) of banks has shrunk, the number of big and old investors selling shares has increased. Some investors are reducing their holdings in the bank. As of mid-January of the current fiscal year, the average ROE of banks is 8.25 percent.

Insurance companies can invest up to 30 percent in fixed deposits of ‘A’ class commercial banks and infrastructure banks. Similarly, life insurance companies can invest up to 35 percent in bonds or debentures of Nepal government, provincial government, local government and Nepal Rastra Bank.

Similarly, life insurance companies can invest up to 15 percent on fixed deposits of class ‘B’ banks and financial institutions licensed by Nepal Rastra Bank. Similarly, Rs 10 per cent can be invested in fixed deposits, 10 per cent in real estate and ordinary shares of listed public companies.

Similarly, the government has also allowed to invest up to 30 percent in preferential shares, bonds, debentures and debentures of class ‘A’, ‘B’ and ‘C’, and up to 20 percent in bonds, debentures and debentures of listed public companies.

Similarly, investors can invest up to 5 percent in Citizen Investment Trust and mutual funds and up to 5 percent in shares of investment companies. In the recent past, the interest rate on fixed deposits by the bank has been around 3 percent. It is said that due to the falling interest rates, insurance companies have started investing in shares.