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With the economic slowdown impacting the income of Nepalis, the insured are increasingly resorting to premature closure of life insurance policies. According to life insurance companies, of the total policies they’ve sold, 10 percent have been surrendered. Currently, there are 15 life insurance companies operating in Nepal. The companies have collected a total of Rs 110bn in insurance premiums in the 10 months of the current fiscal year 2022/23. Insurers say policies worth Rs 10.98bn have been surrendered during the review period. The statistics of the Nepal Insurance Authority (NIA) show 82,648 insurance policies were surrendered till Baisakh (mid-May). According to NIA, the maximum number of policy surrenders in this fiscal year took place in the month of Baisakh. A total of 10,797 policies were surrendered in Baisakh. Generally, people buy life insurance policies to get covered for certain term periods. As per existing arrangements, the insured can surrender the policy they bought before maturity and take back the amount they paid to the insurers as premiums. Now, the trend of surrendering the policy before the maturity period is increasing, according to insurance companies. People surrendering the policy are paid the premium and bonus amount up to the date of surrender in a lump sum. Last year, NIA changed the arrangements barring buyers of life insurance policies from surrendering before settling the premium payments for three years. In the new rule, insurers cannot issue general life insurance policies for less than five years of maturity. NIA data shows 63,331 policies worth Rs 9.88bn were surrendered in FY 2020/21. While the regulator introduced a new provision to control the premature closure of policies in FY 2021/22, the same year saw the number of policies surrendered increasing to 81,860 amounting to Rs 12.18bn. NIA officials estimate if the policy surrender increases at this rate, the number will go up further in the current fiscal year. According to Raju Raman Poudel, Executive Director of NIA, policy surrenders are increasing basically due to the ongoing economic slump which has hit the income of the general people. According to him, high-interest rates, and rising inflation have hit the common people hard, affecting their purchasing power. In most cases, the insured surrenders a life insurance policy to get rid of the burden of the premium amount to be paid to the insurers. An increase in the surrender rate this year could be due to an increased financial burden to the insured caused by increased interest rates of banks and soaring consumer prices, say analysts. The CEOs of life insurance companies agree with Poudel. According to them, the growth of the insurance business has been held back in the current fiscal year due to the economic slowdown and the surge in surrender of policies is a result of the downturn. Along with policy surrenders, there has been growth in the number of policies lapse. Policy lapse happens when people do not pay the installment of the premium within the specified time. The government records show that a total of 41 percent of the population now has access to insurance services. Nevertheless, the surge in surrender of policies is also ringing alarm bells in the insurance sector. Month-wise policy surrender

The top leaders of the ruling coalition have agreed to revise the budget for the next fiscal year 2023/24. With growing discontent within the ruling coalition over the allocation of resources in the new budget, the meeting of ruling parties on Tuesday evening took the decision. The revision of the budget, if done, even before it is endorsed by the parliament, will be the first such amendment in the country's budget history. The demand for the revision of the budget came from the coalition partner CPN (Unified Socialist). The party’s chairman Madhav Kumar Nepal has been openly asking for the budget to be revised. The FY 2023/24 federal budget presented by Finance Minister Prakash Sharan Mahat is being discussed at the parliament currently. According to Prime Minister’s Chief Political Adviser Haribol Gajurel, since the budget has not been passed by the parliament, resource allocation in some of the budget headings can be revised. The Rs 1751.31bn federal budget is currently at the receiving end from the lawmakers of both the ruling and opposition parties for the tax changes in electric vehicles, retrospective tax on mergers as well as the concentration of resource allocation of some of the ruling parties' districts. More than 50 percent of the budget for the Alternative Subsidiary Highway Development Program has been allocated to the districts of Prime Minister Pushpa Kamal Dahal, Finance Minister Mahat, Physical Infrastructure and Transport Minister Prakash Jwala, and former Prime Minister Sher Bahadur Deuba. Of the total Rs 5.17bn allocated for the program, Rs 1.1bn has been allocated for Dadheldura, the home district of former Prime Minister Deuba. Similarly, Rs 665m has been allocated to Finance Minister Mahat’s home district Nuwakot while Rs 541m to Gorkha district, from where Prime Minister Dahal was elected in the parliament. Salyan, the home district of Minister Jwala has received Rs 300m. More than 50 percent i.e. Rs 2.61bn has been allocated to the districts of the Prime Minister, Finance Minister, Physical Infrastructure Minister, and former Prime Minister while the remaining 73 districts have got a 49 percent budget. Since the budget is the prerogative of the government in a parliamentary democracy, the budget presented by the government is passed by the parliament without major changes. If the budget is not passed, the government is considered to have lost confidence. Economists express worry over the ruling parties’ decision saying that it may set a wrong precedent for the future whereby a trend could be established to amend the budget to fulfill the interests of certain parties, leaders, parliamentarians, and individuals. Economist Chandra Mani Adhikari said the decision of the ruling parties to revise the budget even before it gets parliamentary endorsement shows the weakness of the government. “This also indicates the government is not serious about the budget-making process,” he said. Economists say the resource allocation in the budget should be made based on the availability of resources, needs, and capacity while drafting the country’s main fiscal document. “These factors should be paid attention to while preparing the budget. Since there is a coalition government, it should be more serious about it,” said Adhikari. However, some economists said that the budget revision should not be taken negatively. “Budget revision in Nepal is understood as a failure of the government. It may be true to some extent. However, the budget can also be amended to balance it for the right purpose,” said economist Keshav Acharya, “However, it does not bode well if the budget is amended to serve the interests of certain groups.” The revision of the budget, according to Acharya, should be based on necessity. “The issue of unbalanced budget allocation has come into the limelight in the new budget with certain districts getting higher resource allocation,” he said. “The randomly allocated amount should be reduced and added to the districts where allocation is insufficient.”

Police have arrested a person in possession of 561. 30 grams of undeclared gold. A team deployed from the District Police Office, Makwanpur arrested Kisan Sah (22) of Birgunj Metropolitan City-16 with gold worth Rs 5.4 million. He was made public by organizing a press conference on Wednesday. Sah was nabbed with the yellow metal while checking a vehicle (Pradesh 2-03-001 Kha 0159) at the Ratmate Check Post in Hetauda Sub-Metropolitan City-15. Sah had concealed the gold inside his shoes.    

The Nepal Stock Exchange (NEPSE) gained 16.42 points to close at 2,037.06 points on Wednesday. Similarly, the sensitive index surged by 3.82 points to close at 383. 69 points. A total of 12,561,440-unit shares of 275 companies were traded for Rs 5. 01 billion. Meanwhile, Khaptad Laghubitta Bittiya Sanstha Limited was the top gainer today, with its price surging by 9. 99 percent. Similarly, Rastriya Beema Company Limited was the top loser as its price fell by 5.62 percent. At the end of the day, total market capitalization stood at Rs 2. 97 trillion.