Mumbai: Insurance Regulatory and Development Authority (Irda) has allowed insurers to invest in Long Term Bonds for financing infrastructure and affordable housing issued by banks.
In July 2014, the Reserve Bank of India (RBI) permitted banks to issue long term bonds for financing infrastructure and affordable housing.
The insurance regulator said that it has examined the RBI circular and will permit Insurers to reckon such Investments in the Long Term Bonds issued by Banks towards mandatory 'Infrastructure& Housing sector' exposure requirements in case of life insurers.
In case of general insurers, it will be under 'Infrastructure or Housing sector'.
Irda has said that these Investments will continue to be governed by exposure limits of BFSI. The rating requirements will qualify as 'Approved Investment' are as per existing Investment Regulations.
The regulator said that since the banks issue Long Term Bonds towards the dual purpose i.e. Financing Infrastructure and Affordable Housing, Investment Committee of insurers shall ensure to have robust mechanism on classification of such investment to qualify as Infrastructure or Housing Sector exposure considering predominant objectives of the offer.