Govt readies amendments to GIBNA for insurance PSU privatisation; May table Bill in monsoon session | Changes in law for privatization of government insurance companies, bill may come in monsoon session

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  • Govt Readies Amendments To GIBNA For Insurance PSU Privatisation; May Table Bill In Monsoon Session

New Delhi3 hours ago

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NITI Aayog has suggested privatization of United India Insurance to the Core Group of Secretaries on disinvestment. -symbolic picture

The central government has started preparations for the privatization of public sector insurance companies. In this regard, work is going on to amend the General Insurance Business (Nationalization) Act (GIBNA). This bill to change the law can be introduced in Parliament during the monsoon session. The monsoon session of Parliament is expected to begin from July 19.

GIBNA came into force in 1972

The General Insurance Business (Nationalization) Act (GIBNA) came into force in 1972. The Act contains laws related to the acquisition and transfer of shares of Indian insurance companies. According to sources, the work related to change in GIBNA has been completed and it can be tabled in Parliament in the coming session. These changes will help in privatization of general insurance companies. Finance Minister Nirmala Sitharaman had announced a massive privatization in the budget for the financial year 2021-22. This included the privatization of two public sector banks and a general insurance company.

Government wants to increase disinvestment in financial sector

As part of the strategy to increase disinvestment in the financial sector, the government has decided to bring a Mega Initial Public Offering (IPO) of Life Insurance Corporation of India (LIC). Apart from this, the government wants to reduce its stake in IDBI Bank in the current financial year. The Finance Minister had set a target of raising Rs 1.75 lakh crore through disinvestment during 2021-22 in the budget. This amount will be raised by selling stake in public sector companies and financial institutions.

United India Insurance Company may be privatized

NITI Aayog was given the responsibility of identifying two banks and one general insurance company to be privatized to meet the disinvestment target. The NITI Aayog is believed to have suggested the privatization of United India Insurance to the core group of secretaries on disinvestment. Apart from this, the Banking Regulation Act 1949 is also preparing for changes to make privatization of two banks.

Insurance companies got capital support last year

The Union Cabinet, chaired by Prime Minister Narendra Modi, had last year approved a proposal to provide capital support to National Insurance, Oriental Insurance and United India Insurance. Apart from this, the cabinet had decided to increase the authorized capital in National Insurance Company Limited by Rs 7500 crore. Also, it was decided to have a capital infusion of Rs 5000-5000 crore in United India Insurance Company Limited and Oriental Insurance Company Limited. In the same meeting, the Union Cabinet had rejected the proposal of merger of National Insurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited.

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