Moving the General Insurance Business (Nationalisation) Amendment Bill, 2001 in the Lower House, the finance minister also defended delinking subsidiaries of the General Insurance Corporation (GIC) and denied the Opposition charge that it would help the private sector insurance companies.

The minister was replying to allegations of CPM Member Roop Chand Pal, who had earlier said that the GIC subsidiaries were being delinked to help business prospects of private insurance companies.

Mr Sinha said the entire equity of the subsidiaries will continue to remain with the Union government and that it will encourage independence of the companies to be on their own. The GIC will remain a reinsurance company, he added. Moving the Bill, Mr Sinha said, the GIC will undertake re-insurance business which is very important for the country. He said, the country has been losing millions of US dollars as it did not devote due attention to the re-insurance sector.

Asserting that the entire re-insurance business will go to GIC, the finance minister said that the four subsidiary companies will carry on general insurance business. The civil aviation insurance currently being handled by GIC will be taken over by New India Assurance Company.

The Bill proposes to de-link GIC from its subsidiaries by making necessary amendments in the General Insurance Business (Nationalisation) Act, 1972 (Gibna, 1972). According to the statement of objects and reasons appended to the Bill, Gibna will be entrusted with the task of superintending, controlling and carrying on the business of general insurance. On the formation of the GIC, the shares of the Indian insurance companies, which were vested with the Centre, were transferred to the GIC and all the Indian insurance companies became the subsidiaries of the corporation.

Under the scheme framed under Gibna, 1972, the Indian insurance companies got merged in one another and ultimately four Indian companies were left.

With the enactment of Gibna, the share capital of insurance companies, which stood transferred to and vested with the Centre, was immediately transferred to and vested with GIC. It is now proposed to transfer back to the Centre the share capital of the subsidiary companies by making necessary amendmentments in the Act.