“The capital infusion was meant to build their business and strengthen them. So as a result of these, the performance of all these companies has started improving and their losses have come down. In fact, two of the three companies in which capital was infused have already turned profitable.That couldn’t have otherwise happened,’’ finance minister Nirmala Sitharaman
New Delhi:Amid merger talks, finance minister Nirmala Sitharaman has said the government, along with capital infusion, has taken several other measures to improve the performance of three financially weak PSU general insurance companies including Oriental Insurance Company, United Insurance Company, National Insurance Company.
Sitharaman, while speaking in the Rajya Sabha, firmly rebutted the argument that the earlier capital infusion in these general insurance companies helped them to recover from losses but not made them competitive.
“The capital infusion was meant to build their business and strengthen them. So as a result of these, the performance of all these companies has started improving and their losses have come down. In fact, two of the three companies in which capital was infused have already turned profitable.That couldn’t have otherwise happened,’’ she said.
Along with capital infusion, key performance indicators based on monitoring of these companies was also started by the government around 2022. Series of measures have been taken which helped them to improve even their performance. So, it was not infusion to make up for their loss, clarified Sithraman.
The losses of the public sector general insurance companies were mainly due to increased health insurance claims during the COVID pandemic. The capital infusion actually helped them to recover from the shock,’’ said Sitharaman.
The government had infused Rs 17,450 crore between 2019-20 and 2021-22 in three PSU general insurance companies.
In the Budget for 2018-19, the then finance minister Arun Jaitley announced that the three companies — Oriental Insurance, National Insurance, and United India Insurance — would be merged into a single insurance entity to become the country’s largest general insurer.
However, the government dropped the idea in July 2020 due to technical reasons, and the Union Cabinet rather approved a capital infusion of Rs 12,450 crore into the three general insurance companies.