Rajya Sabha passed General Insurance Business (Nationalisation) Amendment Bill, 2021 on Wednesday. NS Lok Sabha Had already passed it once at the beginning of the month. The bill was passed without discussion and was done in the presence of huge opposition from the opposition MPs. The aim of the bill is to provide for greater private participation in public sector insurance companies. in opposition parties Parliament Strongly opposed the passage of the Bill and demanded that the Bill be referred to a Select Committee of the House.
After the bill was passed by the Lok Sabha on August 3, it was moved for consideration and passing by Finance Minister Nirmala Sitharaman. There was a huge uproar in the Parliament during the passage of the bill and the opposition accused the government of not following the norms of Parliament.
What is this bill and why opposition?
The objective of the General Insurance Amendment Bill is to promote greater participation of the private sector in insurance companies that exist in the public sector. It aims to do so by seeking amendments to the General Insurance Business (Nationalisation) Act, 1972. This act was enacted to nationalize all the private companies which were doing general insurance in India.
Now, as to why there is so much pushback, there was no preliminary discussion when it passed on August 11. The opposition saw this as a violation of parliamentary norms and wanted to refer the bill to a select committee of the House. . The opposition considers the move as something that would be detrimental to the interest of the public sector.
What amendment does the bill really want?
As mentioned earlier, the bill aims to amend the General Insurance Business (Nationalisation) Act, 1972, which sought to nationalize all general insurers who were then private. Under this act, the General Insurance Corporation of India (GIC) was established. Oriental Insurance Company Limited, National Insurance Company Limited, United India Insurance Company Limited and New India Assurance Company Limited come under the entity as subsidiaries. These are the only public sector insurers as of now.
The Act was amended once in 2002 where the central government took over control of subsidiaries from GIC. The move also made it a mandatory provision that the central government should require a 51 per cent stake. The new bill sought to remove that provision altogether.
the changes that happened
Three major amendments were made to the Act. The first amendment was to remove the provision of Section 10B of the Act to remove the provision in which the government should hold 51 per cent stake. The second amendment to the Act was the introduction of a new section 24B, according to which the Center can relinquish control over a public sector insurer with effect from a certain date. Then finally, section 31A has been added which imposes a great deal of liability on the non-whole time director. These directors will be held responsible for acts of omission and commission by the insurer.
The next step for this bill and the public sector lies in the enactment of the bill after it is gazetted. After that, all the above changes will be implemented and privatization can be done once again for public sector insurers.
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