Published on Wed, Jul 01, 2009 at 16:01 | Source : CNBC-TV18
Updated at Thu, Jul 02, 2009 at 21:01
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IRDA prohibits insurers from investing in IDRs
The Insurance Regulatory Development Authority has prohibited insurers from investing in Indian Depository Receipts (IDR) as it amounts to indirect overseas investment. The Insurance Act prohibits investment in IDRs. CNBC-TV18's Avni Raja reports.
The Insurance Regulatory Development Authority has prohibited insurers from investing in Indian Depository Receipts (IDR) as it amounts to indirect overseas investment. The Insurance Act prohibits investment in IDRs. CNBC-TV18's Avni Raja reports.
Here is a verbatim transcript of Avni Raja's comments on CNBC-TV18. Also see the accompanying video.
IRDA has right now come with a circular saying that insurers are not allowed to invest in IDRs. That is because Sebi some time back had said that mutual funds would be allowed to invest in IDRs. So in response to that, the regulator has said that insurance companies will not be allowed. Also it's mentioned in the Insurance Act that the companies are not allowed to invest in an IDR.
So, this is another diversification of risk that insurance companies will lose out on.
Considering that insurers have invested Rs 58,000 crore in the markets last year. They are the biggest investors around, so they will lose out in this another area where there is no level playing field.
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