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IRDAI Allowed Investment in Debt Securities of InvITs, REITs

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The Insurance Regulatory and Development Authority of India (IRDAI) allowed insurers to invest in debt instruments which are issued by Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

Categories of Investment:

  • Approved Investments: IRDAI has categorised the investments in debt instruments of InvITs and REITs rated above AA as “approved investments”.
  • Other investments: The instruments which are rated below AA are categorised as “other investments”

Classification based on Ratings of assets: 

  • 75% of investments should be of AAA rated assets,
  • 25% should be of AA or A rated asset,
  • If needed to invest in instruments rated below AA, the insurer has to get approval from the IRDAI.

Other Regulations:

  • As per IRDAI’s regulation more than 10 per cent of the outstanding debt instruments cannot be invested by the insurer in a single InvIT or Reit.
  • The total investment of insurance companies i.e. investments in both units and debt instruments of InvITs and REITs should not exceed 3 per cent of their total fund size.
  • InvIT’s debt instruments will be classified as “Infrastructure Investment” and REITs’ will be a part of industry group “Real Estate Activities”.
  • If the sponsor of the InvITs and REIT is also the promoter of an insurance company then that company cannot invest in the debt instruments of such InvITs and REITs.
  • The Investment in Debt Securities of InvITs/REITs shall be valued either as per FIMMDA or at applicable market yield rates published by any Rating Agency registered with SEBI.

  • The codes applicable under Category of Investment (COI) for Debt Instruments of InvITs and REITs are:

    Approved Investments

    • D42: Debt Instruments of InvITs – IDIT
    • D43: Debt Instruments of REITs – EDRT

    Other Investments

    • E31: Debt Instruments of InvITs – IOIT
    • E32: Debt Instruments of REITs – ODRT

Recent Related News:

The Working Group Committee (WGC) set up by the Insurance Regulatory and Development Authority of India (IRDAI) has recommended the introduction of index-linked insurance policies (Ilips). The report is opened for comments till March 8, 2021.

About Insurance Regulatory and Development Authority of India (IRDAI):

It is formed under the Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) on the recommendations of the Malhotra Committee.

Establishment – 1999(incorporated- 1st April 2000)
Headquarters – Hyderabad, Telangana
Chairman – Subhash Chandra Khuntia