Swadesh Islami Life’s registration suspended over scam

Around a month past most of its directors being relieved of their duties over the alleged embezzlement of a fixed deposit and violation of the insurance act, Swadesh Islami Life Insurance Company has now had its registration suspended for three months.

The suspension came into effect from today as per a letter signed by Abdul Majid, director for law at the Insurance Development and Regulatory Authority (IDRA) and sent to the company's chief executive officer and secretary.

The company had taken a loan of Tk 14.30 crore in phases since its formation in 2014 from NRBC Bank against a fixed deposit of Tk 13.05 crore, which was the company's paid-up capital, according to the IDRA.

However, as per Insurance Act 2010, paid-up capital has to be kept free of liability.

Moreover, the loan was not shown in the balance sheet, so it appears that it was allegedly embezzled, said the insurance regulator.

In December last year, the IDRA gave seven days to 12 of the company's 17 directors, including the chairman, to justify why they should not be relieved of their duties.

It also gave the company's management 30 days to explain why the registration should not be suspended.

The 12 did not respond and the insurance regulator relieved them of their duties in early January.

The 6 directors who were retained had played a negligible role in the embezzlement, a senior IDRA official told The Daily Star on condition of anonymity.

However, the 6 were asked to form a new board but they did not take any initiative, said the official.

During a recent inspection, the company's management did not provide relevant information, prompting the regulator to suspend the registration.

A letter was also sent to the Bangladesh Bank governor seeking necessary steps against NRBC Bank, as it had approved the loans without due diligence, added the official.

Today, the insurer's chief executive officer, Mohammad Jamal Uddin, said they had repaid Tk 4.91 crore against the loan and were trying to pay back the rest.