Finance Ministry Current Affairs - 2019

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GoI merges three Insurance PSUs

The GoI will merge 3 public Sector Insurance Companies as announced in budget 2019-20. The merger includes United India Insurance Limited, National Insurance Co Limited and Oriental Insurance Company Limited.

Highlights

  • The Budget 2019-2020 did not make provision of funds for insurers and the Department of Financial Services. Therefore, the government institutions in the financial sector are forced to seek supplementary demands to fulfil their purposes. The Budget allocated Rs 12,000 crore for this.
  • The General Insurance Companies have sought Rs 500 crore to Rs 3000 crore each to avoid falling below solvency ratio. However, the three companies that are to be merged are struggling to maintain minimum solvency ratio of 1.5

Laws on solvency Ratio

According to the Guidelines of Insurance Regulatory and Development Authority of India, an insurance company has to compulsorily maintain a minimum solvency ratio of 1.5.

The solvency ratio is calculated by dividing company’s tax net operating income by its total debt obligation. The ratio indicates if the enterprise is able to meet its debt obligations. The lower the ratio, the greater is its probability to default its debt obligations.

India-US Economic and Financial Partnership Meeting held

The 7th India-US Economic and Financial partnership meeting was held in New Delhi. It was Co-chaired by Finance Minister Nirmala Seetharaman and US Secretary Steven T Minuchin. The leaders took efforts to improve mutual cooperation on wide range of multilateral subjects. It included combating financing of terrorism and anti-money laundering.

Highlights

  • India and US discussed policies related to stimulate economic growth
  • The countries noted significant steps taken by India to strengthen financial sector that includes
    • Plans to merge state-owned banks
    • PSB recapitalization plans
  • Both the sides also discussed capital flows, external economic environment and investment promotion related issues
  • The US offered its support to stand by India for its Presidency of G20 summit in 2022.
  • The Financial Regulatory Dialogue was also held alongside where the financial regulatory developments in both the sides were discussed
  • In 2017, the US helped the Indian city Pune by financing governmental needs in support of government’s Smart City initiative.