IRDA attempts to boost infrastructure

In an attempt to enhance the flow of insurance funds for infrastructure financing, the Insurance Regulatory & Development Authority has increased the exposure limit to a single infrastructure company to 20 per cent, reports Falaknaaz Syed.

In an attempt to enhance the flow of insurance funds for infrastructure financing, the Insurance Regulatory & Development Authority (IRDA) has increased the exposure limit to a single infrastructure company to 20 per cent from the present ceiling of 10 per cent.

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The limits would apply with immediate effect and would be combined for both debt and equity taken together, without sub-ceilings, according to a circular issued to insurers.

The 20 per cent limit can be enhanced by an additional 5 per cent with approval of the Board of Directors, the circular added. However, IRDA has introduced a caveat that such additional investments should be restricted to debt instruments.

In the case of debt, the duration of investment shall be not less than 10 years and should have a minimum rating of AA by a credit rating agency registered under SEBI. In the case of equity, dividend of not less than 4 per cent including bonus should have been declared in at least for the 5 preceding years.