Guidelines on Investment in Exchange Traded Funds with G Sec Underlying (GILT-ETF)
Insurers are permitted to invest in the exhaustive asset classes under the provisions of Insurance Act, 1938, IRDA (Investment) Regulations, 2000, and guidelines issued there under.
GILT-ETF launched in India, has been after due consideration, permitted for Insurers to invest as a part of "Approved Investments".
In line with investments in Mutual Funds under Gilt/G Sec./Liquid categories, subject to conditions prescribed by Cir: INV/GLN/003/2008-09, GILT-ETFs shall fulfil the following additional conditions:
The GILT-ETFs shall be issued and managed by the Mutual Funds registered under SEBI (Mutual Funds) Regulations, 1996, as amended from time to time.
The object of the GILT-ETFs shall be to invest in a basket of Govt. Securities Actively Traded in the market or constituents’ of a publicly available index.
The minimum investment by the Insurer shall not be less than Creation Unit size and shall not be reduced at any time below Creation Unit Size and value of Creation Unit Size, at the time of investment, shall not be more than Rs.50 lakhs.
The Overall Expense Ratio shall be less than 0.50% of the daily net assets of the scheme.
The Insurers to comply with the provisions of Sec 27E of the Insurance Act, 1938 shall ensure that the GILT-ETFs invest only in Domestic Govt. Securities.
The GILT-ETFs shall be treated at par with GILT/G SEC Mutual funds and shall adhere to exposure norms applicable to "Investment in Mutual Funds (MFs) by Insurance Companies", as per Circular no. INV/CIR/08/2008-09 dated 22nd August, 2008, Circular No.INV/CIR/020/2008-09 dt.11th November, 2008 and Circular No. IRDA/F&I/INV/CIR/213/10/2013 dt. 30th October, 2013.
The Investments in GILT-ETFs shall be listed under Category Code "EGMF" for preparation of IRDAI Periodical Investment Returns.
S N Jayasimhan
Joint Director (Investments)