Insurance sector regulator Irda today said life and general insurance firms can now invest up to 20 per cent of fund value in infrastructure debt funds.
Investment in infrastructure debt fund (IDF) shall be reckoned as investment in the infrastructure sector for which investment ceiling is 20 per cent.
"Insurer can invest up to 20 per cent of the assets under management (AUM) of the schemes. Such investments are subject to overall exposure limits and other conditions," Irda said in a circular.
Earlier, insurance companies were allowed to invest in the infrastructure sector, but with a ceiling of 10 per cent of their AUM .
The Insurance Regulatory Authority of India (Irda) also said both life and non-life insurance companies can subscribe to non-convertible debentures issued by IDF and such investments will be treated as infrastructure investments.
"The Authority...decided that the investment by insurers in above issue (issue of NCDs) can be reckoned as investment in infrastructure sector," it said.
The Irda directive came upon receipt of applications from India Infra debt seeking approval of the issue of Rs 500 crore NCDs to reckon as investment in infra sector by insurers.
The notification of Irda will help in greater amount of fund flow to infrastructure sector which requires investment to the tune of USD 1 trillion during 2012-17.