IRDAI Draft: Insurers May Invest 20% in Infra SPV Debt
Why in the news
IRDAI floated a draft circular easing investment rules so insurers can fund public limited infrastructure SPVs.
Key facts
- Limit: up to 20% of the controlled fund in debt of public limited SPVs in infrastructure.
- Projects must already be in commercial operation with stable cash flows.
- The earlier parent company guarantee requirement is removed.
- Money raised may be used only to refinance the SPV’s existing debt.
- Underlying debt must be standard in lender records; instruments need at least an AA rating.
About SPVs
- A Special Purpose Vehicle is a separate legal entity formed for one project, such as infrastructure or energy.
- A public limited SPV is a public company under the Companies Act that can tap capital markets, with more transparency and oversight, and works only for its specific project.
Exam angle
- Regulator: IRDAI; cap 20%; minimum rating AA.