The Finance Ministry has sought approval from the Parliament for an additional grant of funds for the recapitalisation of three state-run general insurance companies ahead of taking further steps to merge them.
The amount of the grant requested is INR25bn ($351m), reported Indo-Asian News Service. However, this amount appears to be insufficient for the purpose.
The three insurers–National Insurance, United India Insurance and Oriental Insurance–have said that they need immediate recapitalisation of at least INR20-30bn each to maintain solvency ratios and reduce losses. The total requirement is up to INR120bn.
The proposed merger has not been able to move forward due to the weak financial position of these insurers, official sources said. The three insurers have struggled to maintain the minimum required solvency ratio of 1.5 in recent years.