More leeway for insurers on fund raising now

Chennai: The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to allow insurers to issue preference share capital and unsecured debentures/subordinated debt under other forms of capital.

According to the exposure draft issued by IRDAI, the non-convertible preference shares and non-convertible unsecured debentures will have a maturity/redemption period of minimum 10 years for life/general/reinsurers and seven years for standalone health insurers.

The total quantum of the instruments under other forms of capital taken together shall be lower of the following, at any point in time: (i) 50 per cent of the total paid up equity and securities premium account and (ii) 50 per cent of the net worth of the insurer.

The IRDAI said investment in such instruments by foreign investors including Foreign Institutional Investors (FIIs) or foreign portfolio investors (FPIs) shall be subject to the limit specified in the FEMA Act, 1999.