ISLAMABAD: The government has decided to raise the paid-up capital of its state-owned life insurance company by Rs1.2 billion to avoid financial penalties from the United Arab Emirates (UAE), sources said on Thursday.
The move is aimed at meeting a regulatory requirement of the UAE, where State Life Insurance Corporation (SLIC) operates a branch that serves Pakistani expatriates, the sources said.
The paid-up capital of SLIC, the largest life insurer in Pakistan, will be increased to Rs8 billion from Rs6.2 billion , while the authorized share capital will be raised to Rs9 billion from Rs8 billion, the sources said.
"It is necessary to fulfill the regulatory condition of the United Arab Emirates government, because if there is a delay in fulfilling the condition, State Life Insurance Corporation will have to face financial penalties," sources said.
The UAE requires foreign insurance companies to have a minimum paid-up capital of 100 million dirhams to operate in the country, and imposes fines for non-compliance, the sources added.
The SLIC's paid-up capital had fallen below the threshold due to the depreciation of the rupee against the UAE dirham, the sources said. "Therefore, it is inevitable to increase the paid-up capital."