Indian govt’s merger plan hits new barrier

The India government’s plan for a merger of the largest non-life entities is yet to see light, with the Department of Financial Services (DFS) writing to recommend not proceeding with plan in haste and instead examine the plan further.

The fresh impediment has already removed the merger plan from this year’s disinvestment calendar prepared by the Department of Investment and Public Asset Management (DIPAM). Sources now say that with the Finance Ministry raising fresh concerns, it would be difficult for the merger plan to go through even next year when a new government comes in at the Centre, states a report in the Economic Times.

“The DFS is concerned that a merger without looking at the exercise from different angles could lead to problems for the new entity emerging from the coming together of three general insurance firms. Besides, there are also issues of further cutting losses and making operations of companies efficient and low cost. These have been highlighted by the DFS in its letter that virtually stalls the process and seeks more time to complete the merger,” said an official source privy to the development.