The Union Cabinet Wednesday approved capital infusion Rs12,450 crore in three public sector general insurance companies – Oriental Insurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited -- even as it decided to put the merger of the three on hold.
Earlier the government had decided to complete merger of three state-owned general insurance companies by March 2021 and it plan to infuse money to improve their
Solvency ratio and prepare them for merger.
The government had informed that the respective boards of the three companies had given their in-principal approvals for the merger.
But on Wednesday, briefing reporters on the latest proposal of the cabinet, Union minister Prakash Javdekar said the focus at the moment will be on growth and stability of these companies and not the merger.
Sources said the merger had been halted due to Covid-19.
Out of the total infusion, Rs 3,450 crore will be released immediately.
The merger proposal was mooted in the Budget of 2018-19 by then finance minister Arun Jaitley. However, the merger process could not be completed due to various reasons, including poor financial health of the firms.
In this year’s Budget, Finance Minister Nirmala Sitharaman had announced capital infusion of Rs 6,950 crore into these insurance firms.
The government had earlier in February infused Rs 2,500 crore in the insurance firms.
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