IRDAI issues guidelines for investment in debt ETFs with CPSE bonds as underlying

Dec 16, 2019 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Insurance Regulatory and Development Authority of India (IRDAI) on December 11, 2019, issues guidelines for investment in debt ETFs with underlying debt securities of Central Public Sector Enterprises (CPSEs) as eligible class of Investment, and as a part of “Mutual Fund” exposure. IRDAI permits insurers to invest in the various exhaustive asset categories vide Master Circular dated May 03, 2017, investments shall apply for investment made in Debt ETFs, subject to following conditions:-

1. The Debt ETFs shall be issued by Mutual Funds registered with SEBI and governed by SEBI (Mutual Funds) Regulations, 1996, as amended from time to time.

2. The Debt ETF shall invest in a basket of Securities issued by CPSEs which are part of constituents’ of a publicly available index.

3. The minimum investment by the Insurer shall not be less than Creation Unit size and it shall not be reduced to below Creation Unit Size.

4. “All” Securities in the Index shall be complied with rating criteria as per the provisions of IRDAI (Investment) Regulations, 2016 as “Approved Investment” and if the securities gets downgraded below “AA”, the Debt ETF shall be automatically reclassified under “Other Investment”.

The followings are the category of investment (COI) codes which shall apply for investment in Debt ETFs:-


Investment Category Head

CAT Code

Market Value for Form 3A and 3B

D 42

Debt ETFs - “Approved Investments”


Traded Price or at NAV as on the reporting date

E 31

Debt ETFs - “Other Investments”


Traded Price or at NAV as on the reporting date

[IRDAI Circular No. IRDA/F&I/CIR/INV/222/12/2019]


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