Finally, state-owned general insurance companies may be allowed to go public, but only if they have “huge” requirements to raise resources for expansion.
Sources said the government may list the Life Insurance Corporation of India also, but at a later stage.
The funds raised will be used only for their own expansion plans, and will not contribute to bridging the country’s fiscal deficit (the difference between the government’s total revenue and total expenditure), unlike disinvestment in other government companies.
The Insurance Regulatory and Development Authority (IRDA) is likely to look into the matter and come out with detailed guidelines on the same, a highly placed official told Hindustan Times.
“Insurance is a sensitive business involving people’s money. So, the proposal is to allow these companies to list, but with strict riders. They would have to show that they need the funds to expand, and they cannot use it for any other purpose.”
At present, the government wholly owns the four non-life insurance companies — New India Assurance, National Insurance, Oriental Insurance Company and United India Insurance. They would need huge amounts of capital to increase distribution and reach the under and un-served areas.
The total business of all four general insurance companies put together is expected to cross Rs 1 lakh crore by 2020.
It was Rs 42,000 crore in 2013-14. The companies would be hiring over 1,500 officials and 5,000 clerks over the next few months, with over thousands of vacancies to fill