INSURANCE
Cabinet halts merger of 3 PSU general insurers; approves fund infusion of Rs 12,450 crore
Jul-09-2020

The Union Cabinet has decided to halt the merger process of three public sector undertaking (PSU) general insurance companies -- National Insurance Company (NICL), United India Insurance Company (UIICL) and Oriental Insurance Company (OICL) -- for the moment and approved fund infusion of Rs 12,450 crore to improve their financial health. It also decided to increase the authorised share capital of NICL to Rs 7,500 crore and that of UIICL and OICL to Rs 5,000 crore each to give effect to the capital infusion decision.

It said the Rs 12,450 crore capital infusion approved by the Cabinet includes Rs 2,500 crore provided to these companies during 2019-20, and added that Rs 3,475 crore will be released immediately, while the balance Rs 6,475 crore will be infused later in one or more tranches. The government in Budget 2020-21 had made a provision of Rs 6,950 crore for capital infusion in these three insurance companies in order to maintain the requisite minimum solvency ratio.

Minister of Information and Broadcasting Prakash Javadekar said that recapitalisation will make the government-owned insurance companies more stable. He added that the capital infusion will enable the three public sector general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improve risk management.

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