Centre to infuse Rs 5,000 crore in state-run general insurers: Report
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The central government will reportedly infuse Rs 5,000 crore as equity support into state-run general insurers. This comes days after the centre approved the wage revision plan for employees of general insurers. According to a report in Economic Times (ET), the wage revision is likely to cost Rs 8,000 crore to the companies.
"A fresh assessment may be done by the end of the December quarter and, accordingly, a capital allocation may be made," an official aware of the matter told ET.
This is over and above the support of Rs 5,000 crore already given to general insurers. National Insurance has been given Rs 3,700 crore, Oriental Insurance Rs 1,200 crore and United Insurance Rs 100 crore, the report added.
Only New India Assurance is profitable among all the four state-run general insurers. Oriental Insurance, National Insurance and United India are loss-making.
"A restructuring exercise is already being worked out for the general insurers. Once that is implemented, we will have a better assessment of the individual requirements of each insurer," another official told ET.
On October 14, the finance ministry notified the wage revision plan for officers and employees of state-run insurers. They will get salary arrears from August 2017. Also, the next revision will be performance-based.
Insurers have picked consultancy firm EY to advise them on the restructuring procedure.
The government has also been moving ahead with the plans to privatising one general insurer. After the General Insurance Business Amendment Act, the government can now own a 51 per cent stake in public insurers. According to reports, United India may be the first one to be divested.
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