MASTER MIND FINNASSET: IRDA Permits Insurers to invest in Category I Alternative Investment Funds

Monday, March 25, 2013

IRDA Permits Insurers to invest in Category I Alternative Investment Funds

The IRDA has permitted insurers to invest in Alternative Investment Funds subject to the following:

A. The investments in Category I Alternative Investment Funds are permitted under the Head “Other Investments”. Further, such Investments should be restricted to Infrastructure Funds and SME Funds as defined in the Alternative Fund Regulations.
As per the Alternative Fund Regulations, Category I Alternative Investment Fund invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME funds, social venture funds, infrastructure funds and such other Alternative Investment Funds as may be specified under the Alternative Investment Fund Regulations.

B. Insurers should ensure that such Category I Funds should not invest in securities of companies incorporated outside India as Insurers are prohibited for investment of funds outside India vide sec. 27C of the Insurance Act, 1938.

C. The sponsor of such Alternative Investment Fund should not be in the promoter group of the Insurer.

D. The Fund shall not be managed by an Investment Manager who is either directly or indirectly controlled or managed by the Insurer or its promoters.

E. The Investments in Alternative Investment Funds should be clubbed with the investments in Venture Funds and reported to the Authority in the quarterly Investment returns under the category code ‘OVNF'.

F. Investment in the Alternative Investment Fund along with the existing investments in Venture Funds shall be subject to the following exposure norms.

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