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The government is mulling amending some insurance laws as it seeks to privatise one of the three general insurance companies that are yet to be listed. A draft Bill in this regard seeks to remove 51% floor on government holding in these firms. The Bill has been sent to the Union Cabinet for approval prior to its introduction in the Parliament. The draft bill envisages up to 74% holding for foreign investors in the privatised general insurance firm as per rules of management and control, according to a report in The Times of India.
The government, however, has ruled out the possibility of selling off New India Assurance or GIC.
Privatisation of insurance firms
While NITI Aayog has put forth suggestions naming at least one general insurer privatisation, the daily reported that a decision is yet to be taken on which one of three — United India Insurance, National Insurance Company or Oriental Insurance Company — should be privatised.
The name has been sent to the Department of Investment and Public Asset Management and recommendations will be put forth by a panel of secretaries with a ministerial panel before seeking the endorsement of the Union Cabinet.
According to the report, the process of finalisation will happen only after the Bill is passed by Parliament. The government is looking at passing the Bill later this year, and subsequently privatising India’s first insurance company in the coming year.
Budget proposal
Finance Minister Nirmala Sitharaman in her Budget address in February had said that one general insurance company, along with two public sector banks, will be privatised and the process is yet to begin.
The Finance Ministry is seeking to amend the banking laws to facilitate the sale of two-state run lenders towards the end of this year. Accoring to a previous report in The Times of India, the Central Bank of India and Bank of Maharashtra have been picked by the NITI Aayog for the process of disinvestment. The Bill to amend the Bank Nationalisation Act will draw reference from some of the features of the General Insurance Business (Nationalisation) Act.
Initial offer of LIC
The media report, citing sources, said the work for the IPO of LIC has commenced and it is likely to list on the exchanges later in FY22. The roadshows that will be held in the coming months will help the government in ascertaining the valuation and deciding the size of the issue.