In a move that could bring significant resources to the exchequer, the Cabinet Committee on Economic Affairs on Wednesday approved, in principle, the listing of five public sector general insurance companies on the stock markets, with a plan to divest 25% of the Centre’s stake in each of them over time.
The companies whose stake would be offloaded, as per stock market watchdog Securities and Exchange Board of India’s listing norms, are The New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and General Insurance Corporation of India.
“The Cabinet took a decision to approve the listing of public sector general insurance companies on stock exchanges through a fresh issue of equity or an offer for sale or a combination thereof,” Finance Minister Arun Jaitley said, while announcing the Union Cabinet’s decisions. “Since this is a major decision and was announced as a policy in the Union Budget, it has now been approved after consideration,” he said.
“This is a very positive development and the prospects of the industry will go up,” G. Srinivasan, chairman-cum-managing director, The New India Assurance Company told The Hindu .
Asked about the timing of a share sale, Mr. Srinivasan said, “We have in principle approval from the board. Now some nitty-gritty details need to be finalised. It will take 6-8 months to complete the process.”
The official statement said listing will also give the insurers access to more funds from the capital market to expand their businesses “instead of being dependent on the Government for capital infusion.”
“The companies can now start preparing for the move… the process will start,” Mr. Jaitley said. “They could also expand their shareholding so that government shareholding comes down.”
The government had set itself a target of ₹56,500 crore to be earned through disinvestments in this financial year, out of which it has so far earned ₹21,432.38 crore, according to data from the Department of Investment and Public Asset Management.
