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The Insurance Regulatory and Development Authority of India issues amendments to the Master Circular on Investments. Insurers can invest in Additional Tier 1 Perpetual Bonds that meet specific rating, listing, and issuer financial conditions. Insurers can participate in Joint Lenders Forums under Reserve Bank of India guidelines for loan accounts with prior board approval and file required return information. Insurers shift exposure to the protection seller on the purchase of protection under Credit Default Swap provisions. These changes take effect immediately.
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भारतीय बीमा विनियामक और विकास प्राधिकरण INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
CIRCULAR
Date: $30^{\text{th}}$ Nov, 2016
REF: IRDAI/CIR/F&I/INV/239/11/2016-17
As per Section 14 (2) (k) of IRDA Act, 1999, the Authority is empowered to issue amendments to Master Circular – Investments, 2016. This shall be effective from the date of issue of this Circular:
A. Investment in "Additional Tier 1 (Basel III Compliant) Perpetual Bonds" [AT1 Bonds]
The Investment in AT1 Bonds shall be valued either as per FIMMDA or at applicable Market Yield Rates published by any Rating Agency registered with "SEBI"
The following shall be the Category Codes (COI) for AT1 Bonds:
AT1 Bonds as part of "Approved Investments"
AT1 Bonds as part of "Other Investments"
B. Insurers to participate in Joint Lenders Forum (JLF) formed under RBI Guidelines
The Authority permits Insurers to participate in JLF, which is formed under RBI Guidelines for loan accounts which could turn into potential NPAs. Through this mechanism, Insurers may take, need based exposure with the prior approval of the Insurers Board, which may be in excess of exposure permitted under extant IRDAI (Investment) Regulations
Insurers shall file, along with Quarterly Periodical Returns to IRDAI, the following information, as under, apart from making necessary disclosure in Notes to Accounts of Financial Statements.
| No | Name of the Entity | Date of Insurers entry into JLF | Exposure as on the date of Insurers entry into JLF | Additional Exposure as decided in JLF | % of exposure in excess of IRDAI (Inv) Regulations | Date of Approval by the Insurers Board | Comments of Board on Additional Exposure permitted |
|---|---|---|---|---|---|---|---|
C. Amendment to Provision on "Exposure to Credit Default Swap"
The following provisions shall be substituted for Provision of 1.8.a.2.c of Master Circular – Investments, 2016
"On purchase of protection, the exposure with respect to reference entity shall shift to "Protection Seller" to the extent of "Protection Purchased" within Regulation 9 of the IRDAI (Investment) Regulations, 2016 and such exposure shall form part of BFSI Sector, under Industry Sector Exposure
V R IYER Member (F&I)
