The Insurance Regulatory and Development Authority of India on 28th October 2022, published version-03 of IRDAI (Investment) Regulation, 2016 which covers all Circulars, Guidelines which are effective to date, to serve as one stand point reference.
The Master circular contains the investment categories, risk management and concurrent audit, valuation guidelines, operational procedure, fund clearance formats and investment categories codes etc.
Insurers can invest in Equity ETFs, as a part of Mutual Fund exposure, subject to the following conditions:
- Only passively managed schemes of the Mutual Funds which are registered with SEBI and governed by SEBI (Mutual Funds) Regulations, 1996, as amended from time to time are eligible. These schemes should be benchmarked and be tracked based on a publicly available Index
- The total expense ratio shall not exceed 0.50%
- At least 85% securities in the equity basket shall be compliant with respect to dividend distribution norms as per Regulation 3 (A)(5) of IRDAI (Investment) ,2016 to qualify as a part of “Approved Investment”.
- Insurers are required to ensure compliance with the provisions of Sec. 27E of the Insurance Act, 1938 and shall invest only in ETFs which invest in domestic equities.
- These instruments shall be listed on at least one Stock Exchange which has nationwide connectivity terminals.