• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

IRDA has decided to deem these instruments as a part of `approved investments'.

Hyderabad , May 19

The Insurance Regulatory and Development Authority (IRDA) has decided to permit insurance companies to invest in the hybrid instruments offered by banks as permitted recently by the RBI for augmenting their capital adequacy.

The insurance companies, in general, have long-term liabilities and require instruments of investment with matching maturities to optimally manage their assets and liability position.

According to IRDA, the hybrid instruments, which are likely to be issued by both public and private sector banks, would have a minimum maturity period of 10-15 years, and would provide adequate flexibility to the insurers in their asset-liability management with reasonable returns and hence provide insurance companies with appropriate investment opportunity.

The insurance regulator, which had examined various aspects of the hybrid instruments, has decided to deem these instruments as a part of `approved investments'.

However, IRDA has prescribed certain guidelines for insurers to invest in these hybrid instruments. According to this, the debt instrument issued by private sector banks should be rated not less than `AAA' by an independent, reputed and recognised rating agency and those issued by public sector banks should have rating not less than `AA'.

In the case of a life insurer, investments in various hybrid instruments should at all times not exceed 10 per cent of investment in approved category, which are subject to exposure norms (10 per cent of 35 per cent, which is 3.5 per cent of Life Fund).

In the case of non-life insurers, all investments in such hybrid instruments should at any point of time not exceed 10 per cent of investments under approved investments, which are subject to exposure norms (10 per cent of 55 per cent, which is 5.5 per cent of investment assets).

More Stories on : Regulatory Bodies & Rulings | Insurance | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Agri loans: SBI for central processing

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line