IRDA raises equity investment limit for insurance firms

The Insurance Regulatory and Development Authority (IRDA) has raised the investment limit regulations for insurance companies, allowing them to increase their exposure in equity in a private company from 10 per cent to 12 per cent or 15 per cent depending on the size of the controlled fund.

"The Authority believes that this is commensurate and appropriate given the size of funds under consideration without adversely affecting the prudential management of investments," the regulator said in a statement issued after its meeting on Friday.

The new regulations will cheer large state-owned insurance companies like the Life Insurance Corporation, which have been battling for a bigger outlet to invest their funds.

This was one of the key reforms cleared by IRDA shortly before the retirement of its chairman J Hari Narayan.

Hari Narayan, who strongly opposed investment beyond 10 per cent in a single entity earlier, told Hindu Business Line that the changed industry scenario was the reason for the increase.

''The takeover code was earlier 15 per cent, but now it stands at 25 per cent. I also found that the existing act does permit investments beyond 10 per cent in certain cases,'' he said.