The All India Employees' Association (AIIEA), one of the major unions in the non-life insurance sector, has urged Finance Minister Nirmala Sitharaman that the merger process of three public sector general insurance companies (PSGICs) be continued.
In a letter on Saturday, Sanjay Jha, Secretary, standing committee (General Insurance), said, "Since the announcement of merger of three PSGICs two years ago, all preliminary steps, like appointment of consultants and formation of working groups to oversee integration of key areas such as IT and accounts, have been completed."
The consultants as well as the working groups have submitted their preliminary reports also. The boards of these companies recommended convening of extraordinary board meetings at a very short notice in January 2020, he added.
Stating the support of the employees for merger, Jha said the merger process should be accelerated, not halted. Profitable growth, improved solvency ratio could be achieved comfortably if the companies were merged and a single entity was formed, he added.
On July 8, the cabinet meeting, chaired by Prime Minister Narendra Modi, approved Rs 12,450 crore capital infusion, which included Rs 2,500 crore given in FY20, in the three insurers. Of this, Rs 3,475 crore is to be infused immediately and the rest Rs 6,475 crore later.
The cabinet also approved increase in authorised share capital of National Insurance Company to Rs 7,500 crore and that of United India and Oriental Insurance to Rs 5,000 crore each to give effect to the capital infusion.
To ensure optimal use of new capital, it issued KPIs (key performance indicators) for raising business efficiency and profitable growth.