Disinvestment Current Affairs

CCEA approves listing of five general insurance PSUs at the stock exchanges

The Cabinet Committee on Economic Affairs (CCEA) has given its ‘in principle’ approval for listing the five Public Sector General Insurance Companies (2016-17) owned General Insurance Companies in the stock exchanges.

They are New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, National Insurance Company Ltd and General Insurance Corporation of India.

The shareholding of these PSGICs will be divested from 100% to 75% in one or more tranches over a period of time as per Securities and Exchange Board of India (SEBI) and Development Authority of India (IRDAI) rules and regulations.

Significance of listing of PSGICs
  • Bring transparency and equity in the companies functioning as listing on the stock exchange necessitates compliance requirements of SEBI.
  • Improve corporate governance and risk management practices leading to improved efficiency. It will lead to greater focus on growth and earnings.
  • Open the way for the companies to raise resources from the capital market to meet their fund requirements to expand their businesses, instead of being dependent on the Government for capital infusion.
  • Divestment in these companies will help government in raising resources and portion of the funds can be used by the company for expansion.
Background

The Union Finance Minister in his 2016-17 Budget speech had announced that public shareholding in Government-owned companies is a means of ensuring higher levels of transparency and accountability. In order to promote this objective, the general insurance companies owned by the Government will be listed on the stock exchanges.

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Cabinet approves dissolution of Central Inland Water Transport Corporation Limited

The Union Cabinet has given its approval to proposal for dissolution of Central Inland Water Transport Corporation Limited (CIWTC).

CIWTC was incorporated in February 1967 as Public Sector Undertaking under the Companies Act 1956 by the Central Government. It was under the administrative control of Ministry of Shipping (MOS).

It had taken over the assets and liabilities of the erstwhile River Steam Navigation Company Limited (RSNCL) under a scheme approved by the Calcutta High Court.

Why Government is closing CIWTC?

  • Since its inception CIWTC was incurring losses due to inherent limitation and infrastructure bottle necks and never could become viable company.
  • Central Government is closing it in line with its decision to revitalize sick CPSUs wherever possible or to wind up irretrievable cases.
  • The dissolution of the CIWTC would be initiated after disposal of movable and immovable assets. This would free up the assets for better utilization and for the benefit of the people.
  • A number of assets have been taken up by Inland Waterways Authority of India to provide services on National Waterway 4 on Brahmputra River.

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