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Hyderabad, Aug. 28 The new investment norms announced by the Insurance Regulatory and Development Authority (IRDA) will apply to all entities in the insurance industry, including Life Insurance Corporation (LIC).

However, LIC may bring down its stake to less than 10 per cent in individual companies in a phased manner and there is no immediate ‘deadline’ to do so, the IRDA has said.

“While adherence to the 10-per cent cap is mandatory for LIC as an industry player, the modalities can be worked out by dialogue between the regulator and LIC,” Mr C.R. Muralidharan, Member (Finance & Accounts), IRDA, told newspersons on the sidelines of a meeting here on Thursday.

It may be noted that according to the recently-revised norms on investment by the insurers, IRDA has imposed a cap of 10 per cent (of the outstanding shares of the company/fund size) on the investment in a single company. The State life insurer has investments ranging from over 10 per cent to 30 per cent in more than a dozen corporate entities, including Corporation Bank and Reliance Infrastructure Ltd.

The dilution of investments made prior to the announcement of new norms could be brought down in a manner that would not harm the interests of the shareholders or the markets. “The corporations should adhere to the norms in the new investments to be made henceforth,” he said.

Stating that the decision to impose a 10-per cent cap was taken in consultation with the industry (including LIC), the IRDA member said the move was “not LIC-centric, but it is affected incidentally.”

The objective is to facilitate a larger flow of funds to market and to provide a level-playing field. “Ideally the insurers should broaden their focus of investments to a wide range of instruments, such as mortgage-backed securities, among others,” Mr Muralidharan said.

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