In order to boost their financial stability, the Ministry of Finance will spend Rs 3,000 crore capital on state-owned general insurance firms during the current quarter. Last year, the Union Cabinet led by Prime Minister Narendra Modi cleared up a plan to offer capital assistance to National Insurance, Oriental Insurance, and United India Insurance. Recently, as part of the second and final round of supplementary proposals for grants, the Government has applied to Parliament for total additional spending of Rs 6.28 lakh crore for 2020-21.
Which included Rs 3.000 crore for the provision of additional funds for the recapitalization of insurance companies. The infusion will take effect after the Parliament has passed the supplementary request for grants, which will be reconvened on 8 March. The capital injection would help the three general insurance firms in the public sector to strengthen their financial and solvency status, meet the insurance needs of the economy, accommodate improvements and expand the capacity to collect resources and improve risk management.
In the Budget, Finance Minister Nirmala Sitharaman announced the privatization of two public sector banks and one commercial insurance company from April 2021-22. New India Assurance Company and General Insurance Corporation of India, state-owned companies, went public in 2017.