The commerce ministry is now scrutinising a parliamentary sub-committee report, which favours punitive actions.

The parliamentary sub-committee headed by LK Siddique recently advised the government to cancel the licences of 36 insurance companies as 27 of them have failed to go public within the deadline and the rest nine, listed on the bourses, are not holding annual general meetings regularly.

The committee submitted its report to the commerce ministry and the parliamentary standing committee on commerce ministry last month.

Redwan Ahmed, chairman of the parliamentary standing committee, said the committee will discuss the issue in the next meeting scheduled for September 11.

"We suggest stern actions against those companies that have failed to comply with the Securities and Exchange Commission (SEC) rules," Ahmed added.

According to the SEC rules, an insurance company has to offer 60 per cent of its share to the capital market within three years of getting licence.

A total of 27 insurance companies, out of 62, have failed to get listed with the capital market despite repeated regulatory orders. The SEC also has realised a huge amount of money in fine from those companies for non-compliance.

Among the listed insurance companies, the nine firms are continuously making losses and placed in the Z category.

Meanwhile, despite the dismal performance by insurance companies, dozens of entrepreneurs have sought government permission to launch more than one hundred new insurance firms.

The sub-committee also advised the government not to allow any new insurance company in the saturated market.

Rather, the committee suggested merger and acquisition in the insurance sector.

When asked, M Shamsul Alam, chairman of Bangladesh Insurance Association, said the sub-committee did not consult the insurance sector people about preparing the report.

"The report is fully irrational as the body did not talk to the association as well as the controller of insurance," Alam commented.

He said when the potential sector needs support and assistance the government is trying to choke the companies in the guise of regulatory measures.

Alam said it is very difficult for 27 companies to go public simultaneously in a small capital market.