Amid a planned issue of Rs 5,000 crore in infrastructure bonds by LIC, sector watchdog IRDA on Tuesday said there are regulatory concerns on such instruments and favoured imposing restrictions on them.
“As a regulator, we have certain concerns with regard to insurance companies issuing infrastructure bonds. I think there should be certain curbs on such issues by insurance companies. We are yet to look into this issue,” IRDA Chairman J Hari Naryan told reporters on the sidelines of a CII summit on insurance.
No insurer has so far approached IRDA on the issue of infrastructure bonds.
When asked about its planned issue, LIC Chairman T S Vijayan said, “We have not approached IRDA on this. We have not taken a call on when and how to approach IRDA.”
Experts said as per the current regulation, only pure equity is allowed as capital and debt is not permitted to be raised by insurance firms.
On Monday, infrastructure financing firm IDFC launched the country’s first tax-free infrastructure bonds to raise Rs 3,400 crore. Investments up to Rs 20,000 in infrastructure bonds this fiscal is exempte from taxes.