Union Cabinet approves listing of General Insurance Companies at the stock exchanges
Posted on:19 Jan 2017 17:46:20
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19 January 2017 Current Affairs: The Cabinet Committee on Economic Affairs (CCEA) on 18 January 2017 gave its in-principle approval for listing five government-owned General Insurance Companies in stock exchanges. The approval was given at a cabinet meet chaired by Prime Minister Narendra Modi.
The companies are National Insurance Company, New India Assurance Company, Oriental Insurance Company, United India Insurance Company and General Insurance Corporation of India.
The listing will open a way for the companies to raise resources from the capital market to meet their fund requirements. Shareholding of these PSGICs (Public Sector General Insurance Companies) will be divested from 100 per cent to 75 per cent.
This disinvestment process will be carried on as per the existing rules and regulations of Insurance Regulatory and Development Authority of India (IRDA) and Securities and Exchange Board of India (SEBI) will be followed.
It will necessitate compliance to disclosures and accounting requirements of SEBI. These disclosures will act as an additional oversight mechanism and bring equity and transparency in the companies functioning.
It will lead to improved corporate governance and risk management practices in the companies, which will lead to improved efficiency. It will also help in focusing on earnings and growth.
It is expected that this listing will also help the companies in raising resources from the capital market and meet the requirements of funds when they think of expanding their businesses. At present, they depend on government for capital infusion.
Listing of the government-owned general insurance companies on the stock exchange was announced by the union finance minister Arun Jaitley in his Budget Speech for 2016-17. He said that public shareholding in these companies will help in creating higher levels of transparency and accountability.
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