The Insurance Regulatory and Development Authority of India (IRDAI), on December 19, 2025, issued a circular permitting insurers to expand their investment universe to include specified capital instruments issued by All India Financial Institutions regulated by the Reserve Bank of India (RBI).
Under the prevailing regulatory framework, insurers are already permitted to invest in banks’ Additional Tier 1 (AT1) bonds and Tier 2 capital instruments. Further, RBI has allowed All India Financial Institutions (AIFIs) to issue AT1 bonds and Tier 2 capital under the Basel III capital framework with effect from April 1, 2024.
In continuation of its regulatory initiatives and with the objective of enabling better portfolio diversification for insurers, IRDAI has now permitted investments in AT1 bonds and Tier 2 capital instruments issued by RBI-regulated AIFIs, subject to applicable norms and safeguards.
[Circular No. IRDAI/F&I/CIR/INV/142/12/2025]
