New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi has approved on Wednesday capital infusion of Rs 12,450 crore in three insurance PSUs — Oriental Insurance Company Limited (OICL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL). An official statement said that Rs 3,475 crore of the total amount will be released immediately, while the balance Rs 6,475 crore will be infused later. It added that the overall amount includes Rs 2,500 crore released in FY2019-20.
Cabinet also approved an increase in the authorised share capital of NICL to Rs 7,500 crore and that of UIICL and OICL to Rs 5,000 crore, respectively, to give effect to the capital infusion. Further, the process of the merger has been ceased so far in view of the current scenario and focus has now been placed on ensuring profitable growth.
The first tranche of Rs 3,475 crore will be allocated to the three insurance PSUs — OlCL, NICL and UIICL —in the current financial year. The balance amount, on the other hand, will be released in one or more tranches.
The capital infusion will enable the three insurance PSUs to improve their financial and solvency position, risk management, meet the insurance needs of the economy, absorb changes and enhance the capacity to raise resources.
To ensure optimum utilisation of the capital being provided, the government has issued guidelines in the form of KPIs aimed at bringing business efficiency and profitable growth.
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