IRDAI eases norms for insurer investment in infrastructure debt funds

Mumbai, Jan 6, 2024 

New regulation by IRDAI allows greater flexibility for insurers in IDF-NBFC investments 

The Insurance Regulatory and Development Authority of India (IRDAI) has relaxed certain norms on investment in infrastructure debt funds (IDFs) of non-banking financial companies (NBFCs) by insurance companies.

Previously, insurers were permitted to invest in IDFs backed by the central government on a case-by-case basis. The regulator has done away with the requirement for case-by-case approval for IDF as a measure to encourage investments by insurers in the sector and to increase the ease of doing business.

This is in the wake of the Reserve Bank of India's (RBI's) decision to enable IDF-NBFCs to play a greater role in financing the infrastructure sector.

According to recent regulation by IRDAI, insurers are allowed to make investments in IDF-NBFCs which are registered with the RBI and have a minimum credit rating of AA or its equivalent by a Credit Rating Agency registered with the Securities and Exchange Board of India (Sebi) to be eligible for the investment.

These debt securities will have a residual tenure of not less than five years.

[The Business Standard]