The Insurance Regulatory and Development Authority of India (IRDAI), the insurance sector regulator has amended rules for the local insurers to make investment in fund of funds(FoFs) in Alternative Investment Funds (AIFs).
Key points about the Amendment:
As per the ‘Investment -Master circular -2017’ by IRDAI has not permitted investments in AIFs, which are of Fund of Funds(FoFs) and leverage funds and now that circular has been amended.
- As per the amendment, no investments are permitted into AIFs which undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted under SEBI (Alternative Investment Funds) Regulations, 2012.
- Insurers are allowed to invest in FoFs which comply with the requirement of Section 27E of the Insurance Act, 1938 within the country.
- Insurer’s are barred from investment into FoFs which are utilized by AIFs to invest in overseas companies/funds.
- Insurers are not allowed to invest in an AIF which has exposure to an FoF in which the insurer has invested already.
- Certificate Requirement: On a quarterly basis, the insurer need to obtain a certificate which will be issued by the concurrent auditor on the compliance of the conditions and file it with quarterly periodical returns
Recent Related News:
IRDAI has hiked the maximum cover under the standard health insurance plan – Arogya Sanjeevani Policy – from Rs 5 lakh to Rs 10 lakh and also has expanded the sum insured bands under the policy to between ₹50,000 and ₹10 lakhs in multiples of ₹50,000 as against the previous range of Rs 1 lakh – Rs 5 lakh.
About Alternative Investment Fund (AIF):
- AIF is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing it by a defined investment policy for the benefit of its investors.
Categories of AIFs:
- Category I AIFs – Venture capital funds (Including angel funds), Small and Medium Enterprises(SME) Funds, social venture funds, infrastructure funds (Investment for start-up SMEs, infrastructure)
- Category II AIFs – real estate funds, private equity funds (PE funds), funds for distressed assets
- AIFs which do not fall in Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations,2012
- Category III AIFs – Hedge funds, Private Investment in Public Equity Funds (PIPE) Funds
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