Won't exit fully, but will ensure minimum govt presence in insurance: FM

Sitharaman says may even think in terms of amalgamating, or disinvesting in some entities where even bare minimum is not needed

Reiterating the fact that the union government will have a bare minimum presence in the strategically important sectors, finance minister, Nirmala Sitharaman, on Wednesday said, banks, financial institutions, and insurance have been identified as strategic sectors, hence the government will not completely exit these sectors but will have a minimum presence.

Addressing the media, Sitharaman said, “During the budget, a public enterprise policy was announced, wherein we had identified certain strategically important sectors and in them, the bare minimum presence of the government will be there. Banks, financial institutions, and insurance are identified as strategic sectors, which means the government’s minimum presence will be there in insurance”.

“If minimum presence is something that has to be there as per policy, I will obviously be present in LIC, in the general insurance industry, and somewhat in the reinsurance sector also,” she added.

Having said that, the government will look to amalgamate or disinvest in entities in the financial sector, after ensuring that they have a minimum presence. “But, over and above a bare minimum presence, if there is a need for me to identify those (entities), which are there but are probably not necessary for my bare minimum presence, I will think in terms of amalgamating, or disinvesting in them,” the finance minister said.

In the life insurance space, LIC, which is the largest insurer in the country, is state-owned. And, the government is looking to list it on the bourses by the end of this fiscal year (FY22). There are four state-owned general insurers in the general insurance space, namely New India Assurance, National Insurance Company Limited, Oriental Insurance Company Limited, and the United India Insurance Company. In the reinsurance space, GIC Re is the largest reinsure of the country, which is majority government-owned but has gone public.

The government has also offloaded some stake in New India Assurance of the four general insurers by taking it public.

Recently, the government passed the general insurance business (Nationalisation) Amendment Bill in the parliament, with an aim to push greater privatisation in public sector general insurers. The bill seeks to remove the requirement that the Centre should hold not less than 51 per cent of the equity capital in such insurers.

In the Union budget, the finance minister had said, the government will look to take up the privatization of two public sector banks and one general insurance company in the year 2021-22. While the government has not given out the names of the banks or the insurance company they will look to privatise, various names have been floating around since the announcement was made.

Meanwhile, the FM met heads of public sector banks (PSBs) to review the financial performance of the lenders and the progress made by them in supporting the pandemic hit economy. She announced that the cap on pension payouts to bank employees could increase to Rs 30,000from the earlier paltry sum of of Rs 9,284. Also, the public sector banks’ contribution for employee pensions under NPS will be hiked to 14 per cent from 10 pc earlier.