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General Insurance Law to be Amended; Bill Passed by Lok Sabha

Legal Correspondent: Kapilanjan Mahanta

August 02, 2021: The present Government of India has being taking multiple steps to privatize many public sector institutions. Finance Minister Nirmala Sitaraman had recently announced in her speech in the Parliament that two Public Sector Banks and one General Insurance Company will be privatized in the financial year of 2021-22. Hence, the General Insurance Business (Nationalisation) Amendment Bill, 2021 was passed by the Lok Sabha. This shall increase the competition in the insurance market.

At present in India there are four general insurance companies in the public sector. So, one among them will be privatized. However, it has not yet been decided which company shall be privatized. The four companies are National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited.

Earlier, the government couldn’t hold less than 51% of shares in a general insurance company. But, under the new amendment, a private entity or a foreign investor can hold upto 74% of the aggregate equity shares. This also includes portfolio investors. The Bill also provides for better participation from private investors, more security to insurance holders.


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