War Within NLICL Bad for Other Firms

Juxtaposition of firm’s BoD a case of bad corporate culture

The dispute among the directors of National Life Insurance Company Ltd (NLICL) seems to have affected other companies — NLG Insurance Company Ltd (NLG) and another finance company.

Things could get out of hand if the dispute is not settled soon.

NLICL has direct control over NLG, its non-life subsidiary and strong influence on the board of a finance company.

Dissensions between directors Dambar Bahadur Malla and Prema Rajya Lakshymi Singh would have an impact on the other two institutions, said an NLICL source. According to the source, five directors of NLG have been appointed from NLICL.

NLICL has an influential role in yet another finance company as NLICL appointees have been always in key posts on the board of directors of that finance company.

The board of directors of NLICL are close relatives — a challenge to the corporate culture.

NLICL sources link the tussle among directors of NLICL to the Bank of Kathmandu (BoK) affair that is now in the central bank’s control.

“NLICL’s is a similar case where directors battle to grab power,” the source said. Dambar Bahadur Malla was chairman of BoK a couple of years back.

According to the source, NLICL has bulk shares — around Rs 30 million — of BoK and both the warring factions want to hold a decisive role in the bank. “NLICL is a key player in electing directors from among shareholders,” the source said.

Despite the dispute among directors, NLICL’s financial position and management is still strong.

“NRB’s decision to freeze our bank accounts is temporary and does not affect us as we are still competitive in the market,” NLICL manager Suresh Prasad Khatri said adding that the decision would not effect policyholders as well.

The insurance company has a premium fund of Rs 3.5 billion to Rs 3.75 billion in banks collected from around 1,00,000 policy holders.

NRB decided to freeze all accounts of NLICL to safeguard policy-holders interests after it received a letter from the Beema Samiti — the regulatory authority of the insurance companies — requesting for freezing the bank’s accounts.

The decision, however, will not affect the management and administration expenditure from the account and policy-holders can deposit their premiums in their respective banks.