Modi Cabinet clears Rs 12,450 cr capital infusion in Public Sector General Insurance Companies; expert says will strengthen balance sheets
The Union Cabinet chaired by the Prime Minister, Narendra Modi today approved the capital infusion for an overall value of Rs 12,450 crore.
The Union Cabinet chaired by the Prime Minister, Narendra Modi today approved the capital infusion for an overall value of Rs 12,450 crore; (including Rs 2,500 crore infused in FY 2019-20) in the three Public Sector General Insurance Companies (PSGICs) namely, Oriental Insurance Company Limited (OlCL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL). Of this, Rs 3,475 crore will be released immediately; while the balance Rs 6475 crore will be infused later.
Cabinet also approved increase in authorised share capital of NICL to Rs 7,500 crore and that of UIICL and OlCL to Rs 5,000 crore respectively to give effect to the capital infusion. Further, the process of merger has ceased so far in view of the current scenario and instead, the focus shall be on their profitable growth.
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While briefing about the cabinet meeting decisions today, Union Minister for Environment, Forest and Climate Change, Information and Broadcasting, Heavy Industries and Public Enterprises Prakash Javadekar said, "The Cabinet has approved capital infusion of Rs 12,450 crore for three Public Sector General Insurance Companies – Oriental Insurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited, which includes Rs 2,500 crore infused in FY 2019-20."
Speaking on the benefit of this decision Mumbai-based tax and investment expert Balwant Jain said, "The Modi Government move will provide ample liquidity support to the three GICs as the monetary support will help them strengthen their balance sheet leading to timely payment of their staffs and payment of insurance claims to their customers."
Jain went on to add that in coming times, the Modi Government is planning to list these GICs and if their balance sheet remains strong, then they can expect to get a better listing price with the liquidity support provided today by the central cabinet.
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