The Union Cabinet on Wednesday approved capital infusion of Rs.12,450 crore in three Public Sector General Insurance Companies (PSGICs): Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).
Though the government had announced the merger of these companies into a single entity in the 2018-19 budget presented by then Finance Minister Arun Jaitley, this process was halted today in view of the “current scenario” with the focus instead to be on their “profitable growth.”
“The capital infusion will enable the three PSGICs 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,” the official statement said.
The total capital infusion, including Rs. 2,500 crore infused in the year 2019-20, and of which Rs.3,475 crore will be released immediately; while the balance of Rs,6475 crore will be infused later.
“The Cabinet also approved increase in authorised share capital of NICL to Rs.7,500crore and that of UIICL and OlCL to Rs 5,000 crore respectively to give effect to the capital infusion,” the statement added.
In the current financial year, the immediate financial implication would be Rs.3,475 crore as a result of capital infusion in three PSGICs namely PCL, NICL and UIICL as the first tranche which will be followed by Rs. 6,475 Crore.
In the first tranche, the capital infusion of Rs 3,475 Crore will be allocated to three insurance companies: OlCL, NICL and UIICL in the current financial year and the balance amount will be released in one or more tranches. To give effect to the infusion, the authorised capital of NICL will be increased to Rs 7,500 Crore and that of UIICL and OlCL to Rs 5,000 crore respectively.
