Credit Rating – Applicable for Infrastructure Investments

Last updated: 06 January 2021

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The Insurance Regulatory and Development Authority of India (IRDAI) has issued new guidelines regarding credit ratings for infrastructure investments. Insurers must now classify infrastructure investments from companies rated 'A' or higher, with an Expected Loss Rating of 'EL1', as 'Approved Investments'. Any downgrade below these thresholds will result in re-classification to 'Other Investments'.

Insurance Regulatory and Development Authority of India

Ref. No: IRDAI/F&I/CIR/INV/008/01/2021

Date:05-01-2021

CIRCULAR

Credit Rating – Applicable for Infrastructure Investments

In exercise of powers under Regulation 14(2) of the IRDAI (Investments) Regulations, 2016 the Authority directs Insurers to classify Infrastructure investments, issued by Infrastructure Companies, rated not less than “A” along with an Expected Loss Rating of “EL1” as part of “Approved Investment” and should be listed under Category Code “IELB” as per Category of Investment under Master Circular – Investments.

Further, any downgrade of Infrastructure Investment, below “A” or “EL1”, needs to be re-classified as part of “Other Investments” and reported under Category Code “IOEL” as per Category of Investment under Master Circular – Investments. The valuation of the above investments, shall be valued “either as per FIMMDA or at applicable market yield rates published by any Rating Agency registered with SEBI”.

(S. N. Jayasimhan)
HOD-Investments

FAQ :

Infrastructure investments must be issued by companies rated not less than 'A' and have an Expected Loss Rating of 'EL1' to be classified as 'Approved Investments'.

If an infrastructure investment is downgraded below 'A' or 'EL1', it must be re-classified as 'Other Investments'.

Approved infrastructure investments are listed under Category Code 'IELB'.

Re-classified infrastructure investments are reported under Category Code 'IOEL'.

These investments should be valued either as per FIMMDA or at applicable market yield rates published by any SEBI-registered Rating Agency.

Notification No : Ref. No: IRDAI/F&I/CIR/INV/008/01/2021
Source : https://www.irdai.gov.in/admincms/cms/whatsNew_Layout.aspx?page=PageNo4331&flag=1

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