The government is working on the merger of insurance companies.
After banks, the government has now decided to merge the government insurance companies of the country. For this, a plan has also been prepared by the government. According to the information, the Finance Ministry is considering the preliminary proposal to merge three government general insurance companies into a single unit, because their financial condition has improved. The objective of this exercise is to ensure better efficiency and larger scale. Let us also tell you what kind of planning is being done by the government.
Which companies can merge?
The government had invested a total of Rs 17,450 crore in Oriental Insurance, National Insurance and United India Insurance between 2019-20 to 2021-22 to bring them out of the financial crisis. In the budget for the financial year 2018-19, the then Finance Minister Arun Jaitley had announced to merge these three companies into a single insurance unit. However, in July 2020, the government shelved the idea and instead approved capital infusion of Rs 12,450 crore into the three companies.
Consideration on privatization also
According to sources, now after their financial condition has improved, the Finance Ministry is conducting a preliminary review of their merger so that their efficiency can be increased. Sources said that besides this, the proposal of privatization of a general insurance company announced by the government is also being considered. However, no final decision has been taken yet and various options are under consideration. Finance Minister Nirmala Sitharaman had announced a big privatization agenda in the Budget 2021-22, including the privatization of two public sector banks and one general insurance company. After this, in August 2021, Parliament passed the General Insurance Business (Nationalization) Amendment Bill 2021, which opened the way for privatization of government general insurance companies.