The Union Cabinet has approved capital infusion of Rs 12,450 crore in three state-owned general insurance companies to strengthen their capital base and make them more stable.
The National Insurance Company (NICL), Oriental Insurance Company (OICL) and United Insurance Company (UICL) will get the additional capital.
The capital infusion also includes the Rs 2,500 crore pumped in FY20.
Of the total amount sanctioned, Rs 3,475 crore will be released immediately; while the balance Rs 6,475 crore will be infused later.
Cabinet also approved increase in authorised share capital of NICL to Rs 7,500 crore and that of UIICL and OlCL to Rs 5,000 crore respectively to give effect to the capital infusion.
Further, the process of merger has been ceased so far in view of the current scenario and instead, the focus shall be on their profitable growth.
The capital infusion of Rs 3,475 crore will be allocated to three insurance companies-- OlCL, NICL and UIICL as the Tranche-I in FY21 and the balance amount will be released in one or more tranches.
To give effect to the infusion, the authorised capital of NICL will be increased to Rs 7,500 crore and that of UIICL and OlCL to Rs 5,000 crore respectively.