The Union cabinet has cleared a plan to list five state-owned general insurance companies on stock exchanges and trim its stake to 75% from 100%, finance minister Arun Jaitley said on Wednesday.
The decision was made at a meeting of the Cabinet Committee on Economic Affairs, an official statement said separately.
The five companies are: The New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, National Insurance Company Ltd and re-insurance firm General Insurance Corporation of India.
The statement said that the government will trim its stake in these companies in one or more tranches over time. It didn’t specify any timeline for the listing.
The decision is part of the government’s disinvestment strategy to raise funds by selling minority stakes in state-run companies. The government has raised about Rs 23,500 crore through disinvestment in the fiscal year that ends on 31 March and may miss the Rs 56,500 crore target.
Jaitley had announced in last year's budget that the government would list the general insurance companies to improve transparency and accountability.
The statement said that the listing of the insurers will help the companies raise resources from the capital market to meet their fund requirements to expand their businesses, instead of being dependent on the government for capital infusion. It will also improve corporate governance and risk management practices at the five companies, the statement said.
Apart from state-run insurers, India has about two dozen private-sector general insurance companies. Many of those are joint ventures between Indian and foreign companies.
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