Government drops non-life PSU merger plan

Feb 12, 2024



Mumbai: The government has decided against the merger of non-life public sector companies proposed in the FY2019 budget. This has been revealed Financial Services Department To the Parliamentary Standing Committee on Finance.
The decision assumes significance in view of the fact that the government had earlier attributed its losses to unhealthy competition among public sector companies, which were undercutting each other for top-tier growth.
The Standing Committee on Finance released its report on performance review and regulation of the insurance sector last week. In the report, the committee has recommended that the government amend laws to reduce GST on health and term insurance, reduce capital requirements for micro insurers and enable issuance of composite licenses, allowing insurers to cover life and non-life insurance. -To be allowed to do both the tasks of life.
In his budget speech in 2018, the then Finance Minister Arun Jaitley had said, “Three public sector general insurance companies, National Insurance Company, United India Assurance Company And Oriental India Insurance Company will be merged into a single insurance entity and listed later.”
However, the government continued to inject capital into non-life companies in subsequent years. In 2021, Nirmala Sitharaman Said the government would sell stake in a public sector general insurance company, but did not specify whether it would pursue integration.
Responding to the committee, the Department of Financial Services said that the Cabinet had itself decided in 2020 not to proceed with the merger.
Incidentally, the Additional Secretary, Department of Financial Services, while testifying before the Parliamentary committee, said that the problem with general insurance companies was their portfolio – of which 50% is health, 40% motor and only 10% is other lines of business.



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