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AIIEA against halting merger of 3 non-life insurers
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SME Times News Bureau | 13 Jul, 2020
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.
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