The proposed merger of three state-run insurance companies is expected to take place during the financial year starting 1 April 2019 (FY2019), according to a report in The Economic Times. The government is moving carefully on the issue.

Finance Minister Arun Jaitley in his Budget speech in February last year had said that the three public sector general insurance companies — National Insurance, United India Assurance and Oriental India Insurance — will be merged into a single entity and listed subsequently.

According to the FY2019 interim Budget document that was released last Friday, the merger is in process and will see completion in the next financial year as various steps are being taken.  The next financial year starts on 1 April 2019. The enlarged entity, after the merger is effected, is touted to be India's biggest general insurer.

Mr Atanu Chakraborty, secretary at the Department of Investment and Public Asset Management (DIPAM) told The Times of India, “Mergers take time, and you should take time in mergers anywhere. I am telling you with experience mergers have natural obstacles in terms of culture and manpower if nothing else. So, once you align the business then you should start aligning the culture and manpower and you have to go to the last man to be able to do so.”

The DIPAM had asked the Department of Financial Services to examine the issue of the merger and prepare a fresh road. There is a view within the government that the issue needs to be thoroughly examined.

With the proposed merger hovering over the three insurers, vacancies at these state owned general insurers are piling up. According to rough estimates, in the officers' ranks alone,  600-900 posts have remained vacant over the last one year. At the clerical and subordinate levels, the staff shortage is around 12,000, sources in the companies told Business Standard.

While the government has not imposed any official freeze on recruitment at the three insurers, there has been no fresh hiring since February 2018, as the Finance Ministry had advised the companies to suspend new staffing until the completion of the merger, according to a top official of a public sector general insurance firm.