The government is working on plans to restructure the operations of the four subsidiaries of General Insurance Corporation (GIC), but a firm decision cannot be expected till the Insurance Regulatory and Development Authority (IRDA) Bill is passed in the Parliament.
The move, that could result in a possible merger of the four subsidiaries -- National Insurance, New India Assurance, Oriental Insurance and United India Insurance -- is part of plans to equip them to meet increased capital needs in line with the new norms of the IRDA, and to meet private sector competition.
The capital of the four subsidiaries is only Rs 40 crore each, while the minimum capital fixed for a general insurance company by IRDA is Rs 100 crore.
Also, the four companies, until now operating in a monopoly situation, will have to comply with stiffer solvency margin as laid out by the IRDA Bill.
The government has already indicated it is not in a position to recapitalise the PSU firms. GIC holds 20 per cent stake in the subsidiaries, while the rest is held by the government. Any move to merge subsidiaries would requires an amendment to the General Insurance Business (Amendment) Act, 1972.
The debate at the moment is whether the four su
