In a bid to improve financial health of state-owned general insurance companies, the Finance Ministry will infuse Rs 3,000 crore capital into them during the current quarter. The proposal to provide capital support to three public sector general insurance companies - Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL) - has already been approved by the Union Cabinet last year.
The cabinet had also proposed to increase the authorised share capital of National Insurance Company to Rs 7,500 crore and that of United India Insurance Company and Oriental Insurance Company to Rs 5,000 crore each to give effect to the capital infusion decision. The government had halted the merger process of three National Insurance, Oriental Insurance and United India Insurance.
Recently, the government sought Parliament approval for gross additional expenditure of Rs 6.28 lakh crore for 2020-21 as part of second and final batch of supplementary demands for grants. This included Rs 3,000 crore for providing additional funds towards recapitalisation of insurance companies.
The fund infusion will be done after the supplementary demands for grants is passed by Parliament which will reconvene on March 8.
The capital infusion will enable these state-owned general insurance companies to improve their financial and solvency position, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources and improved risk management.
To ensure optimum utilisation of the capital being provided, the government has issued guidelines in the form of key performance indicators (KPIs) aimed at bringing business efficiency and profitable growth.