The insurance regulator IRDAI has eased the rules for Indian insurers investing in domestic Fund of Funds (FoF) including those which back startups. The move comes as a major fillip to scores of startups looking at alternative modes of financing other than foreign private equity and venture capital funds. This will also allow Indian insurance companies to widen their portfolios from conservative modes of investment avenues such as government bonds and public infrastructure projects. However, insurers are not allowed to invest in fund of funds that invest in overseas companies, the Insurance Regulatory and Development Authority of India (Irdai) said in a circular modifying regulations for insurance cos investing in SEBI-approved AIFs.
The insurers have also been restricted to make investments in those AIFs where it may already have an exposure. Insurers looking to make such investments now have to obtain a compliance certificate issued by a concurrent auditor every quarter, as per the new IRDAI circular.