The country's largest insurer, Life Insurance Corporation, plans to approach sector regulator IRDA in the next 8-10 days to get approval for floating infrastructure bonds.
"We are getting ready to approach IRDA for approval for infrastructure bonds. We would be going to the regulator with proposal in the next 8-10 days," a senior LIC official said.
The official, however, refused to disclose the size of bond issue that insurer is planning.
LIC has a headroom to issue infrastructure bonds of Rs 5,000 crore this fiscal.
Earlier this year, the government allowed LIC and a few other finance companies to issue tax-free infrastructure bonds.
Under infrastructure bonds, an individual can invest as much as Rs 20,000 and claim tax benefit apart from the Rs 1 lakh permitted under section 80 (C). This was approved as section 80 CCF as part of the Finance Bill 2011.
Last week, IRDA expressed concern over insurance companies floating infrastructure bonds.
"As a regulator, we have certain concerns with regard to insurance companies issuing infrastructure bonds. I think there should be certain curbs on such issues by insurance companies. We are yet to look into this issue," IRDA Chairman J Hari Narayan had said.
No insurer has so far approached IRDA on the issue of infrastructure bonds, he had said.
Experts said as per the current regulation, only pure equity is allowed as capital and debt is not permitted to be raised by insurance firms.
Meanwhile, infrastructure financing firm IDFC has already launched tax-free infrastructure bonds to mobilise Rs 3,400 crore.