INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

NOTIFICATION

New Delhi, the 3()thMarch, 2002

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

F.No. IRDA/Reg./03/2002.—In exercise of the powers conferred by sections 27 A, 27B, 27D and 114 A of the Insurance

Act, 193 8 (4 of 193 8). 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, nemely:—

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.

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: -

7. "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 SEB1 from time to time."

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

(a) All investments in

Equity / Preference

the

Company

(b)Debentures

(Convertible / partly

convertible/non-conv

ertible)

Long term loans

(d)

Any

other

permitted investments

per

the

Act/Regulation

Limit

for

In vestee

Company

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

less.

Limit Jor the entire group

which

the Investee

Company belongs

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

Life

Insurers

whichever is less.

Limit for the Industry Sector

which

the

Investee

Company belongs

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)

JNotes

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

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART HI—SEC. 4]

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-IMV/E.Yty./61/02]

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