Insurance restructuring push: Govt revisits merger plan for PSU general insurers; capital infusion, privatisation options back on table
The government had infused Rs 17,450 crore between 2019-20 and 2021-22 to revive the companies, which were facing financial distress.
While the earlier merger plan was dropped in July 2020, the Union Cabinet approved a capital infusion of Rs 12,450 crore into the insurers instead.With the entities now financially stronger, a fresh preliminary assessment on consolidation is underway, the sources said.Apart from the merger, the proposal to privatise a general insurance company—announced in the 2021-22 Budget—is also being assessed.
“Various options are on the table, but nothing has been firmed up yet,” the sources said.In 2021, Parliament passed the General Insurance Business (Nationalisation) Amendment Act, removing the requirement that the Centre hold at least 51% equity in a specified insurer.
The amendment sought greater private participation to enhance insurance penetration and social protection.To attract more global players and expand insurance access, the government plans to introduce a Bill in the upcoming Winter session of Parliament to raise the FDI cap in the insurance sector to 100% from the existing 74%.The Winter session will run from December 1 to December 19, with 15 sittings scheduled.
