The Insurance Board (IB) will probe into the alleged irregularities at the Rastriya Beema Sansthan (RBS), including ‘illegal’ benefits extended to the employees that has drawn attention of the Commission for Investigation of Abuse of Authority (CIAA).

The IB move follows a Finance Ministry instruction to investigate the matter as per the CIAA directive to the ministry. The CIAA has already directed the ministry to recover the prize allowance worth over Rs 100 million being distributed to the RBS staff over two decades.

The IB has formed a three-member committee under board member Narendra Man Shrestha to probe into the alleged irregularities at the state-owned enterprise. The committee has been asked to submit its report within 15 days.

The committee will probably send a letter to RBS on Thursday, asking it to submit details about the alleged irregularities, a committee member said. “We have received complaints that employees are forcing the management to provide facilities against the law and premium deposit by people is being used by the RBS officials for themselves,” said the member.

IB Chairman Fatta Bahadur KC said the committee was formed to investigate the complaints filed at the IB over alleged irregularities at the RBS. Earlier, the IB had asked it to stop distribution of dividend for failing to get its balance sheet approved by the regulator.

An RBS official said that prize allowance has been provided to the staff exceeding the amount decided by RBS board.

A board meeting of the RBS on November 1, 2010, had decided to provide the facility in the range of Rs 24,000 to lower-level employees and Rs 28,000 to officer-level employees.

“But higher-level staff have been provided Rs 29,000 per employee,” said the official.

The official said that the RBS staff have also been enjoying bonuses even without holding annual general meeting. Amid intense pressure from the employees’ unions, the RBS board recently decided to provide a telephone allowance of Rs 700 for junior staff and Rs 1,000 for senior staff every month. The RBS board has also decided to increase the loan amount that the employees could receive to Rs 3.5 million from the current Rs 2.5 million. The interest rate on the loan is negligible.

The board’s other decisions include providing additional retirement benefits such as a certain months’ salary for each year served and medical facility amounting to Rs 500,000 for employees turning seriously ill.

The employees unions prevented RBS administrator Ram Bahadur Khadka from entering the RBS headquarters for two and half year asking him to ensure the facilities approved by the Finance Ministry. He was allowed entry to the office only a month ago after an agreement with the ministry.

As the RBS employee bylaw does not speak anything about these additional facilities, implementing them requires an approval from the Finance Ministry.

However, the ministry has made it clear that it would not entertain their demands until the RBS is split into two entities—one dealing in life insurance business and the other in non-life business.

However with the employees unions firmly against the move, it will be difficult to see the RBS split unless the prize allowance is continued, said an RBS source.