Jiban Bima wants its money back. Banks unable to pay

The state-owned life insurer Jiban Bima Corporation is paying the price for a lack of judiciousness. It has deposited the premium money of its insurance customers in weak banks and non-bank financial institutions and, as a predictable consequence, is not getting it back even on maturity of the deposits.

To settle the matured deposits, the corporation has written dozens of letters to the managing directors of the banks and financial institutions concerned, the governor of the Bangladesh Bank, and the finance ministry, but has not yet received any response.

For example, Jiban Bima Corporation made fixed-term investments of around Tk40 crore in two deposit accounts with the private sector First Finance Limited, which matured in February and April of 2018, respectively. At the end of 31 July this year, the sum, including principal plus interest, stood at Tk48.46 crore.

Since the deposit terms expired in 2018, the corporation has kept requesting the financial institution to encash its funds, but in vain. In these four years, the insurance company has sent 38 letters of demand to First Finance.

Moreover, the Financial Institutions Division sent a letter to the Bangladesh Bank governor, while the central bank issued two letters to the First Finance MD and another to the Financial Institutions Division secretary to take measures so that First Finance pays off the Jiban Bima funds.

On 12 June this year, the central bank sent another letter to the financial institution's MD to encash the deposits.  Despite all these letters, First Finance could not honour Jiban Bima's cash-out request because of its feeble health, the insurance company's managing director Md Saiful Islam told the Bangladesh Bank.

The cash-strapped financial institution, listed on the capital market, is also unable to pay off the matured term deposits of individuals. 

Jiban Bima had also found itself in trouble in encashing the seven matured fixed deposits of Tk109 crore that it kept in Padma Bank, formerly known as Farmers Bank. The insurance company had written 31 times to the bank to settle its deposits that matured in 2018 after renewal at different times. But Padma Bank could not honour the requests. 

Later, the bank, with no financial capacity to pay off its dues, placed a repayment plan to the state-owned Jiban Bima Corporation to the effect that it would settle the deposits, which stood at Tk125 crore plus interest, in seven years starting from 2023, alongside continued interest payment at 6%. Jiban Bima accepted the proposal. 

Speaking on why the insurance company agreed to the bank's repayment plan last year, the Jiban Bima Corporation's then MD Zahurul Haque told The Business Standard, "We have accepted Padma Bank's offer as we see it as a better option for now to get our deposits back. If we take recourse to the court for the recovery, it will take a longer time."

At the same time, Jiban Bima has its deposits stuck in ICB Islami Bank. The corporation is not receiving any response from the bank even after sending demand letters at regular intervals.

Jiban Bima MD Saiful Islam told The Business Standard, "It is people's money. We have invested it to make a profit and are supposed to get it back as soon as the term period expires. But they [banks and non-bank financial institutions] did not pay off the deposits on time, putting Jiban Bima in trouble."

Mentioning that the banks and non-bank financial institutions concerned are not responding to the corporation's repeated requests to release its funds, he said, "We are trying to find ways to recover our deposits. Discussions are also going on."

Meanwhile, people concerned have said weak banks and financial institutions do not receive adequate deposits from ordinary depositors, which is why they tend to collect funds from government institutions.

Sometimes, these financial institutions bribe top officials of various government institutions by paying hefty commissions to secure large deposits, they observed, adding that as a result, deposits made with these weak banks and financial institutions oftentimes cannot be withdrawn on time.

However, it is not yet known whether any such incident of bribery has taken place in the cases of Jiban Bima's deposits.

Asked about it, Saiful Islam told TBS that the deposits in question were kept before he joined the corporation as the managing director.

Jiban Bima officials also did not want to disclose information on how much money the corporation has deposited in different financial institutions.

But, according to the 2020 financial report of Jiban Bima, its deposits in various banks and non-bank financial institutions amounted to around Tk760 crore.