Life Insurance Corporation of India (LIC) would be allowed to take debt exposure to infrastructure companies in excess of the ceiling imposed by the industry regulator. The country’s largest life insurer would, however, not get an exemption from the ceiling on investments in equity shares of a single company.
Life insurance companies’ debt exposure to a single company is capped at 10 per cent of total funds. Similarly, life insurers’ investments in the equity of a single company are restricted at 10 per cent stake in a company.
“We will relax the ceiling of 10 per cent debt exposure (to infrastructure companies) for LIC,” said J Hari Narayan, chairman, Insurance Regulatory Development Authority (IRDA). “Based on the standard norms, the LIC board can decide on what its exposure can be.”
When asked if LIC would be allowed to increase its equity exposure in a single company to more than 10 per cent, he said, “We believe that the prudential norms for exposure should be followed. We have to do more analysis to decide.”
In August this year, the insurance regulator had revised the investment norms and had capped the investment in equity, preference shares, convertible debentures, investment in debt/loans at 10 per cent to one company.