Insurance regulator IRDAI has introduced additional guidelines on insurers’ investments in Alternative Investment Funds (AIF), one of which is mandatory to report compliance on a quarterly basis.
The Circular states that the criteria will change a provision, the Master Circular on Investment in 2017, which stipulates that “no investment is allowed in the AIF, which are the Fund of Funds and the Leverage Fund.”
Thursday’s circular stated, “No investment is allowed in AIFs to borrow other than to meet day-to-day operational requirements or permitted under SEBI (Alternative Investment Fund) Regulations, 2012.”
Insurers are allowed to invest in the Fund of Funds (FoFs), which in turn invest within the country. Further, such FoFs should not invest in AIFs which invest in foreign companies / funds.
The regulator prohibits insurance companies from investing in AIFs, which carries a risk to an FAF in which the insurer has invested. The insurance company, on a quarterly basis, is required to obtain a certificate issued by the concurrent auditor on compliance with the conditions and file with quarterly periodic returns, said SN Jayasimhan, HOD-Investments.
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