The National Bank for Agricultural and Rural Credit (Nabard) is likely to be the largest shareholder in the proposed crop insurance company with 30 per cent stake with an initial paid-up of Rs 100 crore, while the remaining equity would be shared between General Insurance Corporation (GIC) and its four erstwhile subsidiaries.
Senior finance ministry officials told Business Standard that GIC would pick up 20-25 per cent stake while the remaining 45-50 per cent stake would be split between the four general insurers -- Oriental, United India, National Insurance and New India Assurance would be equal stakeholders. The details would be worked out over the next few days, said an official.
In this year's Budget, finance minister Yashwant Sinha had announced the establishment of a crop insurance company. The decision comes over 18 months after a sub-committee had submitted a report recommending a crop insurance committee with an initial equity of Rs 500 crore.
The report had also suggested that initially the company would only handle crop insurance business but can take up other agriculture-related businesses in the coming years.
At present, crop insurance, a loss-making business, is being handled by the four general insurance companies. "The crop insurance business will be initially transferred to the new company and later on they may take up other agriculture-related insurance like livestock insurance and others," an official said.
The proposal to set up a separate company for crop insurance had been mooted by the agriculture ministry in 1999, after which a sub committee was set up to work out the modalities.
One of the contentious issues in the setting up of the crop insurance corporation was the division of losses between the Centre and the state. So far, the losses have been shared between the Centre and the states in the ratio of 2:1. The sub committee has recommended that the Centre and the states should share the losses proportionately.
