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In order to improve the financial health, the Ministry of Finance has asked public sector general insurance companies to rationalise branches and cut avoidable expenses. Out of the four public sector general insurers, National Insurance, Oriental Insurance and United India Insurance are loss making, while New India Assurance is the only outlier. The ministry’s advisory follows an approval of the parliament to a bill that would privatise state-owned general insurers in August in line with the budget announcement.
It has also asked banks to expand their business through a cost effective digital medium, and trim administrative layers wherever possible.
Rationalisation should not lead to hardship
General Insurance Employees All India Association, Public sector general insurance companies are implementing various government schemes. Rationalisation of branches should not lead to hardship for the poor as they may have to travel long distances for settlement of their small claims for example cattle insurance or fasal bima.
The union raised these issues before the management of various companies as a stakeholder, the association said there should be presence of a branch in each district headquarter so that the poor don’t have to face any issue.
Finance Minister Nirmala Sitharaman in her Budget 2021-22 had announced a large size privatisation agenda, including privatisation of one general insurance company and two public sector banks.
The government has decided to go for a mega Initial Public Offering (IPO) of Life Insurance Corporation of India and residual stake sale in IDBI Bank in the current financial year, as a part of the divestment strategy.
During 2021-22, the government has budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions.