New Delhi:
After providing some capital, the government aims to complete merger of three state-owned general insurance companies — National Insurance Co Ltd, United India Insurance Co Ltd, and Oriental Insurance Co Ltd — by the end of March, Finance Secretary Rajiv Kumar said.
Respective boards of the three companies have already given their in-principal approvals for the merger.
"Merger of PSU general insurers is at an advanced stage. We can see that happening quite soon. It is already before the Cabinet," Kumar told PTI in an interview.
Though the merger process was in the works, the government would take a call on listing the merged entity after the merger, he said.
Sources in MOF said, three PSU general insurers will a have combined balancesheet in 2020-21.
To facilitate the merger, the Budget has announced a capital infusion of Rs 6,950 crore into the three public sector general insurance companies (PSGICs) in the next financial year.The provision is met from the National Investment Fund(NIF).This will help achieve requisite minimum solvency ratio by each of the three PSGICs, according to the Budget documents.
It was expected that union finance minister Nirmala Sitharaman would announce the plans for execution of final merger of three PSU general insurers ,called as `amalgamation', from Apr 1, in her Budget 2020, presented on Feb 1.
`Though,the roadmap for the `amalgamation' of the three companies are yet to be made public by the MoF,the actual process of merger may take one year after- after Apr 2020,after the governmemnt's final announcement on merger which should happen soon’’ said MoF sources.
`The actual merger plans of three PSU general insurance companies will follow the same pattern as the amalgamation of the 10 PSU banks which are being given one year-beginning Apr 2020- for the actual intergration, though the announcement was made a few months back.
“Whether there will be one CMD for the merged entity immediately, is yet to be seen,'' said industry sources.
Consultant Ernst & Young(E&Y) has already been appointed as the consultant to devise strategies for the implementation of the merger.
The most difficult part of the merger would be the integration of the IT system as all the three companies currently have different IT system.
The government also plans come out with an attractive VRS scheme for around 45,000 employees of three companies.
In his Budget Speech 2018-19, then finance minister Arun Jaitley had announced that the three companies would be merged into a single insurance entity.
However, the merger process could not be completed due to various reasons, including poor financial health of these companies.