NEW DELHI : The Ministry of Finance will inject ₹3,000 crore of capital in general state-owned insurance companies during the current quarter in an effort to improve their financial health.
Last year, the Union Cabinet led by Prime Minister Narendra Modi approved the proposal to provide capital support to National Insurance, Oriental Insurance and United India Insurance.
The firm had also decided to increase the authorized share capital of the National Insurance Company Limited (NICL) to ₹7,500 crore and that of United India Insurance Company Limited (UIICL) and Oriental Insurance Company Limited (OICL) at ₹5,000 crore each to give effect to the decision to inject capital.
Recently, the government asked parliament to nod for gross additional spending of ₹6.28 lakh crore for 2020-2021 as part of the second and final batch of supplemental grant applications. This included ₹3000 crore to provide additional funds for the recapitalization of insurance companies.
The injection will be made after the adoption of the additional requests for subsidies by Parliament, which will meet again on March 8.
The capital injection will enable the three general insurance companies in the public sector to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and strengthen the capacity to mobilize resources and improve risk management.
Finance Minister Nirmala Sitharaman announced in the budget the privatization of two public sector banks and a general insurance company in 2021-22 in early April. In 2017, the state-owned New India Assurance Company and General Insurance Corporation of India went public.