New Delhi: The government is ready with a proposal to change insurance laws to privatize one of the three general insurance companies that are not registered.
The draft Bill, which has been sent for approval by the Union Cabinet before introducing it in parliament, seeks to remove 51% of the floor on government holders, the official source of TI.
Foreign investors will reach up to 74% in a general divestment insurance company that is subject to Indian management and control, said government sources, while overriding plans to sell new Indian guarantees or GIC.
While Niti Aayog has suggested a name at least one general insurance company to be privatized, said source, decision where one of three – the United States, national or oriental insurance – will be privatized has not been taken.
This name has been shared with the Department of Investment and Management of Public Assets and will be recommended by the Secretary Panel with the Panel of the Minister to take a call on it before supported by the Union Cabinet.
The source shows that the finalization process will occur after the bill is removed by parliament.
The government hopes that the way at the end of the year, paves the way for the privatization of the India’s first insurance company next year.
In the budget, Minister of Finance Nirmala Sitharaman has announced the privatization of one general insurance company and two public sector banks, which have not yet begun.
The Ministry of Finance plans to change the banking laws for the sale of two lenders managed by the state later this year and the bill to change the Bank’s nationalization law will utilize several features of the General Insurance Business Law (Nationalization).
As reported first by TOI on June 7, Niti Aayog has identified the Indian central bank and the Bank of Maharashtra for privatization.
The government’s sources say that work has begun on listing Life Insurance Corporation (LIC) later in the financial year with an appreciation exercise.
Assessment will help the government decide the size of the problem, which will also be based on the feedback he received during the Roadshow in the coming months.
“Depends on the taste of investors and what the banker said, we will decide the extent to the sale of shares,” said an officer.
Given the high assessment for insurance giants, the size of the problem may be limited to 10% or more, the source shown.
Last week, the cabinet had cleared a public bid of LIC.