Insurance Regulatory and Development Authority of India (IRDAI) has agreed to consider insurance companies’ bold holding in former HDFC as ‘housing and infrastructure’.

As per the IRDAI circular, the bonds/debentures held by the insurance companies in HDFC on April 4 2022 under the Housing and Infrastructure category will be classified as investments in this category until the maturity of HDFC’s respective bonds.

The housing financier announced the acquisition by HDFC Bank on 4 April and was subsequently merged with the latter on 1 July 2023. 

Following the business combination, HDFC’s debt securities were transferred to the bank.

The latest development comes after insurers sought IRDAI to permit the continuation of investments in HDFC bonds to be categorised under the Housing and Infrastructure sector.

They also requested an exemption from the single investee equity exposure limits prescribed for ULIP’s segregated funds regarding investments in the equity shares of HDFC.

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By GlobalData

Until 30 June 2024, the insurance companies are exempted by IRDAI from abiding by the exposure regulations to single investee equity for individual segregated funds at SFIN level for HDFC Bank shares following the merger.

The IRDAI had raised the limit for investment by insurance companies in financial and insurance companies to 30% from 25% in April 2022, The Hindu Businessline reported