The Union Cabinet has given the go-ahead to make amendments to the General Insurance Business (Nationalisation) Act.
Amendment To Remove Govt’s Stake
The amendments would facilitate the privatisation of government-owned insurers by removing the clause which has the Centre holding at least 51% in public sector insurance companies at any given time.
It will also make provisions for transfer of management control from the government to the potential buyer.
The Department of Investment and Public Asset Management will lay the groundwork for the public sector insurer privatisation process.
Timeline Of Privatisation Process
In the next steps, a panel of secretaries with a ministerial panel will make a decision.
In the final step, the Union Cabinet will finalise the candidate after the Bill is cleared by Parliament hopefully later this year.
Going by this timeline, the privatisation of India’s first insurance company could take place next year.
Govt Welcomes FDI And Overseas Investors
The government has increased foreign direct investment in the insurance sector to 74%.
Now, overseas investors can also pick up stake in a government-owned insurer up to that ceiling.
Union Budget Target
Finance Minister Nirmala Sitharaman had informed of the government’s decision to privatise one general insurance company, along with two public sector banks while presenting the Union Budget.
The government is targeting privatisation of one insurer in the ongoing fiscal year and the process of shortlisting appropriate candidates is ongoing.
Candidates In Consideration
Niti Aayog recommended United India Insurance Company to be privatised in the banking, insurance, and financial services sector.
The sector is considered ‘strategic’ in the new public sector enterprises policy for an Atma nirbhar Bharat.
Other insurance companies – National Insurance Company and Oriental India Insurance have also been propped up as candidates.
Any plan to sell New India Assurance or GIC has been ruled out.