New Delhi, Nov 09: Insurance Regulatory and Development Authority is set to allow insurers to invest in Interest Rate Derivatives to cover their risks in a falling interest rate regime. "We are vetting it and the guideline would be issued shortly," IRDA chairman C S Rao said.
He said the investments in IDR would be allowed only to hedge interest rate risks.
So far, insurers are allowed to invest in central and state government papers, approved securities like "AA" rated corporate debts papers and equities.

The move to allow investment in IRDs comes in the wake of presentation from insurers for some instrument to hedge risks at a time when interest rates have headed southward.
The Reserve Bank of India has drastically brought down its benchmark Bank Rate to 6.0 per cent in the last five years while average yields on 10-year government paper is hovering at lower than 5.0 per cent. Bureau Report