Context
The Insurance Regulatory and Development Authority of India (IRDAI) has permitted Indian insurers to invest in Maharajah INR Bonds, the proposed onshore rupee-denominated bonds of the New Development Bank (NDB). The NDB proposes to raise about ₹25,000 crore over five years through these bonds.
Explanation
- The New Development Bank (NDB) is a multilateral development bank established in 2015 by the BRICS countries—Brazil, Russia, India, China and South Africa.
- It is headquartered in Shanghai, China, and finances infrastructure and sustainable development projects in emerging economies.
- The proposed Maharajah INR Bonds are rupee-denominated bonds issued in India, unlike Masala Bonds, which are rupee-denominated bonds issued outside India.
- Since these bonds are denominated in Indian rupees, they can help the NDB mobilise domestic capital for lending to projects in India.
- The proceeds are proposed to finance infrastructure, green, social and sustainable-development projects.
- IRDAI has treated these bonds as approved investments for insurers, subject to applicable regulatory norms.
- The bonds fall within the definition of “securities” under the Securities Contracts (Regulation) Act, 1956.
- The move can broaden insurers’ investment options while providing long-term institutional finance for development projects.
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