The Insurance Regulatory and Development Authority of India (“Authority” or “IRDAI”) has issued a consultation Circular bearing reference number IRDAI/INV/CIR/08/2024-25/01, dated December 18, 2025, regarding Consultation on Insurers’ Investment in Infrastructure SPVs (hereinafter referred to as ‘Circular’) .
The key highlights of the Circular are as follows:
- Infrastructure development is recognized as a critical enabler of growth and a priority for Vision 2047, with current IRDAI regulations already specifying mandatory minimum investment limits for the housing and infrastructure sectors.
- IRDAI notes recent RBI directions that permit various regulated entities (SCBs, NBFCs, etc.) to provide Partial Credit Enhancement (PCE) to bonds issued by Special Purpose Vehicles (SPVs) to enhance credit ratings and improve access to the bond market.
- The Authority proposes to facilitate investment norms for infrastructure SPVs that have commenced Commercial Operation and achieved stabilized cash flows, eliminating the requirement for a parent company guarantee or parent company net worth and rating.
- Projects that have reached the commercial operation stage offer predictable cash flows (via tolls, utility fees, or lease payments), lower technological obsolescence risk, and often maintain monopolistic market positions, making them suitable for the long-term liability profiles of insurers.
- A new provision is proposed under Schedule III of the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, allowing insurers to invest in debt issued by Public Limited SPVs in the infrastructure sector.
- Insurers may invest a maximum of 20% of the debt issued by the SPV or the amount under clause 8(2)(a), whichever is lower, as part of Approved Investments.
- The proposed investment is subject to the following eligibility conditions: The proceeds of the issue must be utilized to refinance existing debt/loans of the SPV. The debt or loan must be treated as standard in the books of the lender. The debt issued must carry a minimum credit rating of AA.
- IRDAI invites feedback regarding the adequacy of the SPV funding structure and mandated disclosures for risk mitigation.
- Stakeholders are requested to submit comments or suggestions within 21 days from the date of circulation to Mr. Manish Misra (AGM) and Dr. Ravinder Kaur (DGM) at their respective official email addresses.
Source category: IRDAI
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