Bill to facilitate general insurer sell-off gets nod

By: |
August 03, 2021 12:23 AM

The Bill, which was introduced on Friday and saw little discussion, was passed amid frequent disruptions in the lower House.

Several opposition members opposed the Bill on the ground that it would entail total privatisation of state-run general insurance firms.Several opposition members opposed the Bill on the ground that it would entail total privatisation of state-run general insurance firms.

The Lok Sabha on Monday approved a Bill to amend the General Insurance Business (Nationalisation) Act (GIBNA), which will enable the government to undertake the proposed privatisation of a state-run general insurer by diluting its stake below 51%.

The Bill, which was introduced on Friday and saw little discussion, was passed amid frequent disruptions in the lower House.

Introducing the GIBNA amendment Bill, 2021, last week, finance minister Nirmala Sitharaman had, however, sought to allay fears of unbridled privatisation of state-run insurers. She asserted that the Bill’s passage will help public sector insurers mop up additional resources from the markets, which will enable them to design more innovative products and even offer services at lower premiums. The Bill was cleared by the Cabinet last Wednesday.

Several opposition members opposed the Bill on the ground that it would entail total privatisation of state-run general insurance firms.

Sitharaman had said private general insurers could easily raise money from the market, which enables them to offer a better premium for insuring the public and resort to develop innovative product base. “Whereas public general insurance companies are not able to perform because they are always short of resources,” she said, seeking to justify the need for amendments to the extant law.

Announcing the Budget for FY22, Sitharman had proposed to take up the privatisation of two state-run banks and one general insurer. “This would require legislative amendments…,” she had said.

At present, the country has four public-sector general insurers – National Insurance Company, New India Assurance Company, Oriental Insurance Company and the United India Insurance Company.

The government is yet to announce the name of the firm for sell-off. However, Niti Aayog, which has been entrusted with the task of recommending a suitable candidate for privatisation, has reportedly suggested the name of United India to the core group of secretaries on disinvestment headed by the Cabinet secretary.

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