There could be a further delay in the Narendra Modi government’s proposal to merge the three state-owned non-life insurance companies - Oriental Insurance, National Insurance and United India Insurance, according to sources. The reason: the Centre is looking to set up a group of ministers (GoM) to chart an action plan to go ahead with the merger, the sources said.
Not rushing onto the decision, the government aims to better understand the fallout from such a major exercise as well as possibly understand the business model, the sources added.
Former Finance Minister Arun Jaitley had announced the merger plan in his February 2018 budget speech. The merged entity would eventually be listed on the stock exchanges, as per the plan.
The July amendments to the insurance laws clearly show that there is a clear intent to move forward, but there could be possibly some delay in this particular proposal in terms of the timelines.
The development comes three weeks after reports that the three state-owned non-life insurance firms have sought a capital infusion of Rs 12,000 crore from the Centre, to stay afloat and conduct business.
The idea to merge the three insurers was to create a stronger and larger insurance company sustainable in the long run. The other two state-owned entities, New India Assurance and General Insurance Corporation of India are listed on the exchanges.