The Union Cabinet is likely to set a deadline for the merger of three state-owned general insurance companies to be completed in the financial year ending March 2022 (FY2022).
Sources told Moneycontrol that the Cabinet is finalising the proposal and will meet the insurers for a final nod by May 2020.
The proposal involves the merger of National Insurance, Oriental Insurance and United India Insurance.
“The idea is to have a deadline given (for the merger) so that there is clarity on how long it will take. Now that the merger of the state-owned banks has been finalised, the Cabinet should consider us next. But the listing may only happen by the last quarter of FY2022,” said an insurance official.
On 5 March, the Cabinet approved the consolidation of 10 public sector banks into four entities. Finance minister Nirmala Sitharaman said that the merger process is on course.
The idea to merge the three insurers is to create a stronger and larger insurance company that will be sustainable in the long run. Once they are merged, the enlarged entity will be listed on the bourse. This plan was announced in the Budget in February 2018. At present, there is a need for the government to pump in money to improve the solvency position of the insurers.