Housing finance companies and infrastructure finance companies will get higher funding from the insurance companies as the sector regulator Insurance Regulatory and Development Authority (IRDA) has relaxed investment norms for these firms.
“The investments in the debt instruments issued by housing finance companies as specified in the investment regulations shall not be included under the exposure to financial and insurance activities,” IRDA said in a notification.
Presently, it said, such exposure to housing finance companies and infrastructure finance companies is treated as exposure under financial and insurance activities.
However, the industry exposure limits will continue to apply for such investments, it said.
According to analysts, the measures will help these companies to attract long-term funds from insurance companies and help them in overcoming liquidity crunch.
Among other measures, the single investee debt exposure limits in housing finance companies have been enhanced to 20 per cent of equity plus free reserves from existing 10 per cent limit.
The 20 per cent limit mentioned above can be further increased by an additional five per cent with the prior approval of board of company, the notification said.
The group and promoter group exposure norms will continue to apply on the investments made in a housing finance company, it said.
These decisions were taken after representations from housing finance companies and infrastructure finance companies.