Cabinet approves listing of five general insurance PSUs

RSTV Bureau
Finance Minister Arun Jaitley Photo-PTI

Finance Minister Arun Jaitley

On Wednesday the union cabinet approved plans to divest a 25 per cent stake in five public sector general insurance companies by listing them on stock exchanges.

The companies are New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company and General Insurance Corporation of India (GIC).

The move was taken to encourage them to raise funds from capital markets and also improve corporate governance.

“It could be either by fresh equity or Offer for Sale. Both options are available. We can expand the shareholding so that the government share comes down to 75 per cent,” Finance Minister Arun Jaitley told reporters after the Cabinet meeting in Delhi.

The government shareholding in these companies will be reduced from 100 per cent to 75 per cent in one or more tranches over a period of time, Jaitley said.

“All procedural formalities are over. Now the companies will have to comply with the listing requirements with stock exchanges and SEBI,” he said when asked whether they will be listed in the current financial year, ending on March 31.

During the process of disinvestment, he said, the existing rules and regulations of Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDAI) will be followed.

Listing is expected to lead to improved corporate governance and risk management practices leading to improved efficiency, he said, adding that a greater focus on growth and earnings can also be expected.

Listing will also open the way for the companies to raise resources from the capital market to meet their fund requirements to expand their businesses, instead of being dependent on the government for capital infusion.

In other decisions, the Cabinet gave a green signal to the amendment in Modified Special Incentive Package Scheme to further incentivise the electronic sector.

It also approved the decision to set up the Indian Agricultural Research Institute in Jharkhand with an outlay of ₹ 200 crore.

(With inputs from PTI)