IRDA to help expand investment avenues, product lines for life insurers

The Insurance Regulatory and Development Authority of India (IRDA) will allow life insurance companies invest in infrastructure SPVs (special purpose vehicles) floated by any company, provided the SPV is a wholly-owned subsidiary of the parent company and the debt instrument issued by the SPV is guaranteed by the parent.

Finance minister P Chidambaram At present, investment is permitted in an infrastructure SPV floated by a public sector enterprise subject to the condition that the parent company meets the rating criteria. The new guidelines are intended to encourage investments in infrastructure, finance minister P Chidambaram said today.

At present, there is a stipulation that 75 per cent of investments in debt (excluding investments in government securities/other approved securities) should be in AAA rated instruments.

IRDA will consider relaxing the current investment rules to provide that the minimum requirement of 75 per cent in AAA instruments would apply to debt investments, including government securities and other investments as provided in the Insurance Regulatory and Development Authority (Investment) Regulations, 2000. 

This is expected to release a space of about 12.5 per cent for investments in less than AAA rated debt instruments, Chidambaram said.

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