Covid: Govt drops plan to merge insurance companies
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New Delhi: The Union Cabinet on Wednesday approved capital infusion of Rs 12,450 crore for three state run insurance companies - the Oriental Insurance Company, the National Insurance Company and the United India Insurance Company.
According to an official release, in the wake of the pandemic and critical financial position, the Centre has decided to drop its earlier plan to merge these three general insurers. Instead, it will now focus on their solvency and profitable growth, post capital infusion, it said.
The approved amount also includes Rs 2,500 crore infused in FY 2019-20.
In the last budget on February 1, the government had set aside Rs 6,950 crore for recapitalisation of the three public sector general insurance companies.
Experts have time and again sought capital infusion in the state-run insurers as they are undercapitalised.
The government had planned to merge these three general insurers and then list them on the bourses. In January, the boards of these companies had approved the merger.
