IRDA Investment Amendment… — F.No. IRDA/Reg./03/2002

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IRDA Investment Amendment… — F.No. IRDA/Reg./03/2002 | IRDAI regulation · Complied AI

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What changed

The Insurance Regulatory and Development Authority issues regulations to amend the Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Every insurer must limit investments based on exposure and prudential norms. The regulations define limits for investee companies, group companies, industry sectors, equity shares, immovable property, and promoters' groups. Existing insurers receive modified limits for specific exposures. The regulations come into force on the date of publication in the Official Gazette.

What you must do

All investments in the promoters' groups category must specifically be referred to the Authority.

Key dates

Effective from: 30 Mar 2002
Date of coming into force: 30 Mar 2002

Who is affected

Every insurer must limit his investments based on the exposure norms.
In the case of existing insurers, limits stand modified as specified.

Thresholds

Exposure at any point of time must not exceed 10% of the subscribed share capital, free reserves and debentures/ bonds of the investee company or 10% of total assets for non-life insurers and 10% of controlled funds for life insurers, whichever is less.
Group company exposure must not exceed 10% of aggregate subscribed share capital, free reserves and debentures or 10% of total assets for non-life insurers and 10% of controlled funds for life insurers, whichever is less.
Investment in any industrial sector must not exceed 10% of its total investment exposure to the industrial sector as a whole.
Investment in equity including preference shares and equity convertible part of debentures must not exceed 50% of the exposure norms.
An insurer shall not have investments of more than 5% in aggregate of its controlled funds for life insurers or 5% in aggregate of its assets for non-life insurers in companies belonging to promoters' groups.

Ask about this regulation

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Document text

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Official PDF

[भाग III—खण्ड 4] भारत का राजपत्र : असाधारण 3

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

NOTIFICATION

New Delhi, the 30th March, 2002

Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2002

F.No. IRDA/Reg./03/2002.—In exercise of the powers conferred by sections 27A, 27B, 27D and 114A of the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations to amend the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, namely:—

1 (1) These regulations may be called the Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2002. (2) They shall come into force on the date of their publication in the Official Gazette.

2 Note 7 after Regulation 4 which is applicable to both Regulation 3 and Regulation 4 of the Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2001 is being substituted by the following:—

"Investments in equity shares listed on a registered stock exchange should be made in actively traded and liquid instruments viz. equity shares other than those classified as thinly traded as per guidelines governing Mutual Funds issued by SEBI from time to time."

3 Regulation 5 shall be amended to read as follows:—

"5. EXPOSURE/ PRUDENTIAL NORMS

Without prejudice to anything contained in sections 27A and 27B of the Act, every insurer shall limit his investments based on the following exposure norms:

Type of Investment	Limit for Investee Company	Limit for the entire group to which the Investee Company belongs	Limit for the Industry Sector to which the Investee Company belongs
(a) All investments in Equity / Preference Shares of the Company (b) Debentures (Convertible / partly convertible/non-convertible) (c) Short/ Medium/ Long term loans (d) Any other permitted investments as per the Act/Regulation	In the case of Indian Insurance Companies: Exposure at any point of time not to exceed 10% of the subscribed share capital, free reserves and debentures/ bonds of the investee company or the 10% of the Insurer's total assets in case of non-life insurers and 10% of the Controlled funds in case of Life insurers, whichever is less.	Exposure at any point of time not to exceed 10% of the aggregate subscribed share capital, free reserves and debentures of all the group companies in which investments including investments under considerations, have been or proposed to be made by the insurer or the 10% of the total assets in case of Non-Life Insurers and 10% of the Controlled Funds in case of Life Insurers whichever is less.	Investment by the insurer in any industrial sector would not exceed 10% of its total investment exposure to the industrial sector as a whole. (Classification of industrial sector to be done on the lines of classification in Industries done by CMIE (Centre for Monitoring Indian Economy)

Type of Investment

Limit for Investee Company

Limit for the entire group to which the Investee Company belongs

Limit for the Industry Sector to which the Investee Company belongs

(a) All investments in Equity / Preference Shares of the Company

(b) Debentures (Convertible / partly convertible/non-convertible)

(d) Any other permitted investments as per the Act/Regulation

In the case of Indian Insurance Companies:

Exposure at any point of time not to exceed 10% of the subscribed share capital, free reserves and debentures/ bonds of the investee company or the 10% of the Insurer's total assets in case of non-life insurers and 10% of the Controlled funds in case of Life insurers, whichever is less.

Exposure at any point of time not to exceed 10% of the aggregate subscribed share capital, free reserves and debentures of all the group companies in which investments including investments under considerations, have been or proposed to be made by the insurer or the 10% of the total assets in case of Non-Life Insurers and 10% of the Controlled Funds in case of Life Insurers whichever is less.

Investment by the insurer in any industrial sector would not exceed 10% of its total investment exposure to the industrial sector as a whole. (Classification of industrial sector to be done on the lines of classification in Industries done by CMIE (Centre for Monitoring Indian Economy)

Notes

Subject to exposure limits as per Insurance Act, 1938, investment in equity including preference shares, investment in equity convertible part of debentures should not exceed 50% of the above exposure norms as mentioned in the table. A similar 50% of exposure norms limit would also apply to investment in immovable property.
Subject to exposure limits mentioned in the table above, an Insurer shall not have investments of more than 5% in aggregate of its Controlled funds in the case of a life insurer or 5% in aggregate of its assets in the case of non-life insurer in the companies belonging to the promoters' groups. For the purposes of this regulation "group" will have the same meaning as in the MRTP Act, 1969. All investments in this category would specifically be referred to the Authority.
The percentage of 10% of the total assets in the case of Non-Life insurers and 10% of the Controlled Fund in case of Life insurers can be raised to 15% in each case subject to specific approval of IRDA."
In the case of existing insurers: The limits mentioned above as applicable to the Indian Insurance Companies, shall stand modified as under:—

(a) exposure at any point of time not to exceed 20% of the subscribed share capital, free reserves and debentures/ bonds of the investee company or 5% of the Controlled funds of the life insurer or 10% of the general insurers total assets.
(b) The limit prescribed in respect of exposure to the industrial sector shall stand increased to 20% in the case of investments in Financial Institutions.

N. RANGACHARY, Chairman [No. ADVT-III/IV/Exty./61/02]

IRDA Investment Amendment Regulations 2002

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IRDA Investment Amendment Regulations 2002

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