Irdai okays debt ETFs of CPSEs as eligible class of investment for insurers

Irdai on Wednesday allowed insurance companies to invest in debt ETFs (exchange traded funds) of CPSEs.

The instruments have been permitted as eligible class of investment, according to guidelines issued by the insurance regulator.

The Insurance Regulatory and Development Authority of India's (Irdai) guidelines allow insurers to invest in various exhaustive asset categories.

"Irdai hereby permits debt ETFs with underlying debt securities of central public sector enterprises (CPSEs) proposed to be launched in India, as eligible class of investment, and as part of mutual fund exposure," the regulator said in the circular on Wednesday.

Irdai said such debt ETFs should be issued by mutual funds registered by Sebi and governed by its regulations.

"The debt ETF shall invest in a basket of securities issued by CPSEs which are part of constituents of a publicly available index. The minimum investment by the insurer shall not be less than creation unit size and it shall not be reduced to below creation unit size," Irdai said.