Govt approves listing of general insurance companies

The move is aimed at accelerating government’s plans to raise money through disinvestment of equity stakes in the PSUs

GN Bureau | January 19, 2017


#Arun Jaitley   #insurance companies   #listing   #PSU  

The cabinet committee on economic affairs (CCEA) chaired by prime minister Narendra Modi has approved listing of five state-run general insurance companies. The move is aimed at further accelerating government’s plans to raise money through disinvestment of equity stakes in the public sector undertakings (PSUs), following its other similar recent initiatives, a PIB release stated. 

 
The government holds entire 100 percent stake in all the five state-run general insurance companies, namely — New India Assurance Company, National Insurance Company, Oriental Insurance Company, United India Insurance Company and a re-insurance firm General Insurance Corp. 
 
Addressing media, finance minister Arun Jaitley said that the government holding in these five companies will gradually fall to 75 percent post listing in one or more tranches over a period of time. This is in line with India’s listing requirements as mandated by the regulator. During the process of disinvestment, existing rules and regulations of securities and exchange board of India (SEBI) and insurance regulatory and development authority of India (IRDAI) will be followed, the release said.
 
The listing may include both, issuing fresh shares with the proceeds going to the companies itself, and offer for sale of existing shares with the proceeds going to the seller – the government. However, it was not immediately clear if the government is targeting listing of all five companies in the current financial year itself. 
 
Jaitley in his 2016-17 budget speech had said that the government proposed to undertake important banking sector reform and public listing of public sector general insurance entities. India has already raised the foreign direct investment limit in insurance sector to 49 percent from 26 percent.
 

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