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Banking & Finance News

FinMin Considering to Reduce Govt's Stakes on CPSEs Below 51%

Last week, Finance Minister Nirmala Sitharaman said the Government would move forward on the merger of the three State-owned general insurance companies — National Insurance Company, United India Insurance, and Oriental Insurance Company — as announced in the previous Budget.

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SMEStreet Desk
20 Nov 2019 02:45 IST

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Nirmala Sitharaman

The Union Cabinet will soon consider a proposal to bring down Government stake in central public sector enterprises (CPSEs) to below 51 per cent even while retaining the State control, sources said.

Besides, the Cabinet headed by Prime Minister Narendra Modi is likely to take a call on the merger of public sector general insurance companies.

The Budget for 2018-19 had proposed the merger of three public sector general insurance companies and subsequent listing of the merged entity on stock exchanges.

Last week, Finance Minister Nirmala Sitharaman said the Government would move forward on the merger of the three State-owned general insurance companies — National Insurance Company, United India Insurance, and Oriental Insurance Company — as announced in the previous Budget.

In her Budget Speech of 2019-20, Sitharaman had announced the Government has been following the policy of disinvestment in non-financial public sector undertakings maintaining the Government's stake not to go below 51 per cent.

"The Government is considering, in case where the undertaking is still to be retained in Government control, to go below 51 per cent to an appropriate level on a case-to-case basis. The Government has also decided to modify present policy of  retaining 51 per cent Government stake to retaining 51 per cent stake inclusive of the stake of the Government controlled institutions," she had said.

Such a move is possible by amendment to Section 241 of the Companies Act.

Sources said the Government envisages that the Government can bring down its stake in a public sector undertaking by roping in other State-owned entities to retain the public sector nature.

For example, the sources said, if LIC picks up stake which lowers the Government holding below threshold level of 51 per cent, the companies still are majority controlled by the Government.

The Government fixed an ambitious disinvestment target of Rs 1.05 lakh crore for the current financial year, up from Rs 90,000 crore projected in Interim Budget 2019-20 in February.

Nirmala Sithraman CPSEs
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