The public sector insurance companies — National Insurance, Oriental Insurance and United India Insurance — are going to be infused with funds worth Rs 12,000 crore to boost their capital base and meet regulatory norms, Livemint reported. The move comes after the recapitalisation of Public Sector Banks (PSBs)
The Union Budget 20-19 has also provisioned Rs 70,000 crore for PSB recapitalisation and last week an Rs 55,250-crore infusion was announced in several PSBs for regulatory and growth requirements. Also, Rs 12,000 crore capital infusion plan has been approved by the nodal Department of Financial Services, in the three state-run general insurance companies as their financial conditions are very weak.
The Union Budget 2018 announced plans to merge these three insurance companies, and thereafter list the combined entity. The process of merger could not be completed due to various reasons, including the companies’ poor financial health. For listing, a 1.5 solvency ratio is needed which at present is not the case with two of these companies. These two units are struggling to maintain their solvency ratio, which is a key financial metric used to measure a company’s ability to meet its debt obligations.
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