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Budget News

  • Insurance companies can classify green bond purchases as infra investments: says IRDAI
  • January 16,2023  19:20

  • The Insurance Regulatory and Development Authority of India (IRDAI) has said that insurers will be allowed to classify their sovereign green bond purchases as infrastructure investments.

    The regulator, in a circular dated January 13, said the move was made with the objective of de-concentration and diversification of insurers' infrastructure portfolios as well as from the perspective of participation in environmental, social and governance (ESG) initiatives.

    Insurance firms had asked for clarification on how they could classify investments made in these green bonds, which are being issued for the first time, said traders.

    India aims to raise 160 billion rupees ($1.96 billion) by issuing its first sovereign green bonds this fiscal year. The Reserve Bank of India will auction 5- and 10-year green bonds worth 40 billion rupees each on Jan. 25 and on Feb. 9.

    Investments in green bonds may qualify for Statutory Liquidity Ratio (SLR) - the minimum percentage of deposits commercial banks are required to invest in liquid assets, such as government bonds.

    Finance Minister Nirmala Sitharaman announced plans to issue sovereign green bonds in the 2022-23 budget as Asia's third-largest economy attempts to tap the domestic debt market to finance green infrastructure projects.

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