The government is likely to infuse additional capital in the range of Rs 3,000 crore to Rs 5,000 crore in three public sector general insurance companies in the current financial year.
Giving this information, the sources said that this additional capital will be given to these companies on the basis of their performance and requirement during the year. After getting the capital investment, public sector general insurance companies- National Insurance Company Ltd., Oriental Insurance Company Ltd. And the financial health of United India Insurance Company will improve.
In the last financial year also, the government had infused Rs 5,000 crore in these companies. During the financial year 2020-21, these companies had received capital of Rs 9,950 crore from the government. Of this, Rs 3,605 crore was invested by United India Insurance, Rs 3,175 crore by National Insurance and Rs 3,170 crore by Oriental Insurance.
Sources said that weak general insurance companies were given capital support in the last financial year. This year some more funds are needed to make these companies profitable again. Sources said that these companies will get this additional capital on the basis of their performance. In view of the possibility of further funding to these companies, the government has already increased their authorized capital.
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An external consultant will soon be appointed to improve the operational efficiency of the three public sector companies. Four public sector companies through General Insurer Public Sector Association of India (GIPSA) have sent Request Proposal (RFP) for restructuring. Its aim is to return to a profitable position and develop employees.
It is proposed to restructure the organization for profitable growth and development of employees through management of performance and capacity, the RFP said. The last date for submission of bids is June 2, 2022. Of the four public sector general insurance companies, only New India Assurance Company is listed on the stock exchanges. The rest of the companies are wholly owned by the government.
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