Centre to infuse Rs 12,000 crores in state general insurance firms

Must Read

Howdy, Modi! : World media reactions on Modi-Trump’ grand Houston Event address

New Delhi, Sep 23: United States President Donald Trump and Indian Prime Minister Narendra Modi on late Sunday shared...

Howdy Modi : Modi-Trump mark history in US-India relationship with great show at Houston

Houston, Sep 22:  Modi, delivering his speech at the historic event, talks about the development underwent over five years...

ECI announces dates of Maharashtra & Haryana elections; Single Phase Election on October 21; Result on 24th

Election Commission of India has announced the dates of much-awaited state elections. According to the Chief Election Commissioner, Sunil...
New Delhi, Sep 6 (IANS) Following the recapitalisation of public sector banks (PSBs), now public sector insurance companies — National Insurance, Oriental Insurance and United India Insurance — are going to be infused with funds worth Rs 12,000 crore to boost their capital base and meet regulatory norms, sources said.

The Budget had provisioned Rs 70,000 crore for PSB recapitalisation and last week a Rs 55,250-crore infusion was announced in several PSBs for regulatory and growth requirements.

The nodal Department of Financial Services has approved the Rs 12,000 crore capital infusion plan in the three state-run general insurance companies as their financial conditions are very weak.

Last year’s Budget announced plans to merge these three insurance companies, and thereafter list the combined entity.

The process of merger could not be completed due to various reasons, including the companies’ poor financial health. For listing, a 1.5 solvency ratio is needed which at present is not the case with two of these companies.

These two units are struggling to maintain their solvency ratio, which is a key financial metric used to measure a company’s ability to meet its debt obligations.

As against the Insurance Regulatory and Development Authority’s (IRDA) solvency ratio norm of 1.5, National Insurance has a solvency ratio of 1.5, while United India’s level is comparatively lower at 1.21.

The consolidation in the public sector general insurance companies is part of the disinvestment strategy of the government. The Centre had appointed EY as a consultant to see through the completion of the merger process.

Sources said the government would have to infuse Rs 12,000-13,000 crore in these three companies to improve their solvency ratio and prepare them for the merger.

Sources said that these three insurance companies will be merged after the capital infusion, and post the merger, the entity will be the largest insurance company in the country.

In 2017, New India Assurance Company and General Insurance Corporation of India were listed on the bourses and the exchequer earned money from the stake sale.

The government has fixed a disinvestment target of Rs 1.05 lakh crore for the current fiscal.


Disclaimer This article is published directly through a syndicated feed and not edited by The Indian Wire staff.

- Advertisement -

Latest News

Kajol shares beautiful image with mother Tanuja

Mumbai, Sep 23 (IANS) Bollywood actress Kajol has shared a beautiful photograph of herself hugging her mother and veteran...

Burj Khalifa lights up in ‘Friends’ theme

Dubai, Sep 23 (IANS) As popular American sitcom "Friends" turned 25 a day ago, fans all across the globe were seen paying tribute to...

Thomas Cook collapse ‘big, big blow’ to Goa tourism

Panaji, Sep 23 (IANS) The collapse of Thomas Cook, one of the oldest tourist travel companies in the world, will be a "big, big...

Cricket fraternity condoles demise of Madhav Apte

New Delhi, Sep 23 (IANS) The cricket fraternity paid rich tributes to former Indian Test opener Madhav Apte who passed away on Monday at...

Bruna shares giving water birth to daughter

Mumbai, Sep 23 (IANS) Model-actress Bruna Abdullah has shared her giving birth story on social media and also shared a photograph of her...
- Advertisement -

More Articles Like This