- Merger of IIFCL and IFCI will create a bigger financing firm for the sector.
- No proposal of a merger in the general insurance space.
- Recently, Cabinet approved reduction of a stake in five state-owned general insurance companies to 75 percent.
The finance ministry is examining the possibility of merger of two state-run financial institutions India Infrastructure Finance Company (IIFCL) and IFCI to create a bigger financing firm for the sector. The proposal is under the active consideration of the ministry and has the potential to bridge the huge deficit in the infrastructure ministry, a senior finance ministry official said.
Currently, financial institutions are not capable of providing for huge infrastructure requirements as there is a mismatch between assets and liability, the official said. Asked if a merger in the general insurance space is also being considered, the official said there is no such proposal.
India has four PSU general insurance companies – New India Assurance Company, United India Insurance Company, Oriental Insurance Company and National Insurance Company.
Recently, the Cabinet approved the reduction of a stake in five state-owned general insurance companies to 75 percent by listing them on the bourses. The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, approved the listing of five government-owned general insurance companies including re-insurance firm General Insurance Corp of India (GIC). The government shareholding in these companies will be reduced from 100 percent to 75 percent in one or more tranches over a period of time and the department of investment and public asset management (DIPAM) has already identified companies and initiated process in some cases.
The government plans to divest Rs 11,000 crore worth of stake in public sector unit (PSU) general insurance companies to meet the steep disinvestment target of Rs 72,500 crore next fiscal.
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