Market regulator Insurance Regulatory and Development Authority today enhanced the investment limit under various categories.
At present General Insurance Companies are allowed to invest upto 1.50% of its assets into liquid mutual funds under the approved investment category where the size of the fund is above Rs. 2,000 crores. As per the new guidelines, they will be allowed to invest an additional 1.50% or Rs. 3,500 crores. This decision to enhance the limit was taken based on the several representation made by the mutual fund industry. IRDA clarified that the decision to enhance the limit is temporary and can be revoked at a later stage.
New guidelines also read that Life Insurance companies can invest upto 5% in fixed deposit schemes of promoter group bank as against the existing rule of 3%. It said that “considering the representations made from the insurance industry and life insurance council, it has been decided to hike the investment limit in fixed deposits in promoter group schedule bank to 5%.” Industry experts believe that this amendment will allow private life insurance companies to invest approximately Rs. 15,000 crores in the fixed deposit with the promoter group bank.
IRDA has also increased the limit for investment in Information Technology and Industrial sector from existing 15% to enhanced 20%. At the time of approving the enhanced limit, Board said that as the industrial weightage on the benchmark is dynamic and Information Technology sector contributes more than 15% of the total indices and that weigtage keeps on changing from time to time, it has been decided to give general consent to have additional exposure of 5% in the industrial segment.
