Govt to divest 25% stake in general insurance PSUs

Girja Shankar Kaura

Tribune News Service

New Delhi, January 18

Prime Minister Narendra Modi-led NDA government has decided to divest its stake in the state-owned general insurance companies (GICs) and list these with stock exchanges. 

The approval for divesting of 25 per cent of the government stake in the GICs came at a meeting of the Cabinet Committee on Economic Affairs chaired by the PM.

The Union Cabinet also gave ex-post facto approval to the package for supporting micro and small enterprises (MSEs) — Augmentation of the Corpus of Credit Guarantee Trust Fund for Micro and Small Enterprises. There would be an augmentation of the corpus of the trust from Rs 2,500 crore to Rs 7,500 crore, to be fully funded by the Centre.

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There would be increased coverage of loans under the credit guarantee scheme from Rs 1 crore to Rs 2 crore, besides an increase in coverage for loans extended to micro and small enterprises by non-banking financial corporations (NBFCs).

Finance Minister Arun Jaitley said the listing of the GICs would open the way for the companies to raise resources from the capital market to meet their fund requirements. He said the shareholding would be divested from 100 per cent to 75 per cent in one or more tranches over a period of time.

The companies are New India Assurance, United India Insurance, Oriental Insurance, National Insurance and General Insurance.

Jaitley, in his Budget Speech for 2016-17, had announced that public shareholding in government-owned companies was a means of ensuring higher levels of accountability; and to promote that objective, the general insurance companies owned by the government would be listed on the stock exchange.