IRDAI has asked insurers to comply with additional investment conditions for GILT-ETFs, requiring them to invest in a basket of government securities actively traded in the market.
The regulator said GILT-ETFs issued and managed by mutual funds shall be treated at par with GILT/government securities.
In line with investments in mutual funds under gilt or government securities or liquid categories, GILT-ETFs shall fulfill additional conditions, Insurance Regulatory and Development Authority of India (IRDAI) said in a circular to CEOs of all insurers.
"The object of the GILT-ETFs shall be to invest in a basket of government securities actively traded in the market or constituents' of a publicly available index," it said.
Insurers are permitted to invest in exhaustive asset classes. Investment in exchange-traded funds with underlying government securities (GILT-ETF) is allowed as part of 'Approved Investments', it said.
Among others, GILT-ETFs shall be issued and managed by mutual funds.
Also, the minimum investment by insurers shall not be less than the creation unit size and it should not be below creation unit size. The value of creation unit size, at the time of investment, shall not be more than Rs 50 lakh, IRDAI said.
IRDAI added that the overall expense ratio should be less than 0.5 per cent of the daily net assets of the scheme and the investment in GILT-ETFs should be only in domestic government securities.
