IRDAI eases norms of bank bonds, InvITs/REITs

IRDAI has allowed insurers to buy more perpetual bonds

issued by banks and permitted them to participate in the public listing of highyielding InvITs (Investment Trusts), enhancing the capital sources for such instruments that hitherto faced growth challenges due to the lack of wider institutional patronage.

“The aggregate value of AT1 (additional tier one) bonds held in a particular bank, at any point of time, shall not excess 10% of the total outstanding AT1 bonds of that particular bank,” IRDAI said.

Earlier, the cap was meant for any particular primary issuance of those bonds, popularly known as perpetual papers.

AT1 bonds have no fixed maturities and are raised to shore up the capital base. These quasi-equity securities yield much higher returns than traditional bonds as the risk is also larger.