Prohibition of loans
29.(1) No insurer shall grant to, or to any member of the family of, any director, manager, actuary, auditor or officer of the insurer any loan or temporary advance, either on hypothecation or property or on personal security or otherwise, except a loan on life policies issued by the insurer within the surrender value.
(2) Except with the prior approval of the Board of Directors at a regularly convened meeting by the vote of not less than two-thirds of the total number of directors and also, upon a reference by the Board, of the Government, no insurer shall grant any loan or temporary advance to any firm or company in which any director, manager, actuary, auditor or officer of the insurer, or any member of the family of such director, manager, actuary, auditor or officer, has any interest as proprietor, partner, director, manager or managing agent.
(3) The director concerned shall not vote at, or otherwise participate in, the proceedings of the meeting of the Board considering the grant of any such loan or advance as is referred to in sub-section (2).
(4) Where any event occurs giving rise to circumstances the existence of which at the time of the grant of any subsisting loan or temporary advance would have made such grant a contravention of sub-section (1) or sub-section (2), such loan shall, notwithstanding any contract to the contrary, be repaid within three months from the occurrence of such event and, in case of default, the director, manager, actuary, auditor or officer concerned shall, without prejudice to any other penalty to which he may be liable, cease to hold office with the insurer granting the loan or advance on the expiry of the said three months.
(5) Nothing in sub-section (1) or sub-section (2) shall apply to loans or advances granted by an insurer to a banking company or to a subsidiary company being an insurer or to any insurer to which the insurer granting the loan or advance is a subsidiary company.
(6) Nothing in sub-section (1) shall apply to any stipend paid to any insurance agent or employer of agents while he is undergoing a course of training approved by the Government.
(7) The provisions of section 86D of the Companies Act, 1913 (VII of 1913), shall not apply to a loan granted to a director of an insurer being a company, if the loan is one granted on the security of a policy on which the insurer bears the risk and the policy was issued to the director on his own life, and the loan is within the surrender value of the policy.
(8) Subject to the provisions of sub-section (1) no insurer shall grant to any employee, insurance agent or employer of agents any loan or temporary advances except-
(a) loans on life policies issued by him to an employee, insurance agent or employer of agents within their surrender value;
(b) loans on mortgage of immovable property provided-
(i) the Chief Controller of Insurance certified that the insurer, if he transacts life insurance business, has complied with the provision of section 27;
(ii) the value of the property is at least twice the amount of the loan;
(iii) the property is situated in such towns as may be notified in this behalf;
(iv) the loan is made in such instalments [as may be decided by the Board of Directors of the insurer] if the purpose of the loan is to construct a house;
(v) the loan is repayable within a period of fifteen years; and
(vi) the loan is of such amount that the instalment of capital and interest does not exceed one-fourth of the basic salary of the employee or one-fourth of the renewal commission or over-riding commission of an agent or an employer of agents, as the case may be, during a year;
(c) loans for the purchase of a conveyance to an employee, insurance agent or employer of agents, provided-
(i) the employee, insurance agent or employer of agents has served the insurer continually for such period [as may be decided by the Board of Directors of the insurer];
(ii) the conveyance purchased is mortgaged to the insurer;
(iii) the loan does not exceed such amount, and is subject to such conditions as to the time allowed for its repayment, [as may be decided by the Board of Directors of the insurer] [:
Provided that the total loan referred to in sub-clause (b) (iv) and (c) shall not exceed ten per cent of the net profit of the preceding year of the insurer after payment of income tax;]
(d) temporary advances to an employee, insurance agent or employer of agents not exceeding,-
(i) in the case of an employee, two months' salary;
(ii) in the case of an insurance agent, the renewal commission earned by him during two years immediately preceding the date of application for the advance, or a sum not exceeding two hundred and fifty Taka if he has not earned a renewal commission or has earned a renewal commission of less than two hundred and fifty Taka; and
(iii) in the case of an employer of agents, the renewal commission and the over-riding renewal commission earned by him during the year immediately preceding the date of application for the advance, or a sum not exceeding one thousand Taka if he has not earned any renewal commission and over-riding renewal commission or has earned a renewal commission and over-riding renewal commission of less than one thousand Taka:
Provided that, in respect of the life insurance business of an insurer, the total temporary advances referred to in this clause shall not exceed at any time ten thousand Taka, in the case of insurers having a life insurance
fund of less than ten lakhs of Taka and one per cent of the life insurance fund subject to a maximum of two hundred thousand Taka, in any other case.