New Delhi Government can impose Sources said additional capital of Rs 3,000-5,000 crore in three public sector general insurance companies depending on their performance and requirement during the year.
The capital investment will help in improving the financial health of general insurance companies – National Insurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company.
Whose capital did the government invest in the last financial year? 5,000 crore in these three insurance companies.
During 2020-21, 9,950 crore was invested by the government in three PSU general insurance companies, out of which Rs 3,605 crore was poured into United India Insurance. 3,175 crore in National Insurance and 3,170 crore in Oriental Insurance.
Sources said that while weak general insurance companies were given fund support in the last financial year, they need some more funds to bring them back on the path of profit.
capital flow of Sources said an investment of Rs 3,000-5,000 crore could be made in these companies depending on their performance, with the government already increasing their authorized capital keeping in view further funding.
The three public sector general insurers are below solvency margin and an external consultant will be appointed soon to improve operational efficiencies.
Four public sector firms through General Insurers Public Sector Association of India or GIPSA have issued Request for Proposal (RFP) to reorganize insurance companies and achieve profitability and employee development.
The RFP said, “In alignment with the Key Performance Indicators (KPIs) prepared by Public Sector General Insurance Companies (PSGICs), it is proposed to restructure the organization to bring about profitable growth and employee development through performance management and capacity management. ” ,
The last date for submission of bids is June 2, 2022.
Of the four government general insurance companies, only New India Assurance Company is listed on the stock exchanges; The remaining three are wholly owned by the government.
Significantly, the government has already announced its intention to privatize a general insurance company. To facilitate privatization, Parliament has already approved amendments to the General Insurance Business (Nationalisation) Act (GIBNA).
Finance Minister Nirmala Sitharaman had announced a massive privatization agenda in the Budget for 2021-22 that included two public sector banks and a general insurance company.
“We propose to privatize two public sector banks and one general insurance company in the year 2021-22. This will require legislative amendments,” she had said at the time.