IRDAI yet to ask for de­tails of in­sur­ance cos’ ex­po­sure to DHFL

The Hindu Business Line - - NEWS - SURABHI

The in­sur­ance reg­u­la­tor has not yet sought de­tails of the ex­po­sure of in­sur­ance com­pa­nies to home fi­nancier De­wan Home Fi­nance Ltd (DHFL) even as in­sur­ers have adopted cau­tion while deal­ing in NBFC se­cu­ri­ties.

“As of now, the In­sur­ance Reg­u­la­tory and De­vel­op­ment Author­ity of In­dia has not asked us for de­tails of our in­vest­ments in DHFL,” said an ex­ec­u­tive with an in­sur­ance com­pany, adding that they are closely mon­i­tor­ing the sit­u­a­tion.

“For the sec­tor, it’s not too much of a con­cern as the rat­ing is still AA+. We have been given to un­der­stand that the com­pany still has suf­fi­cient liq­uid­ity,” he added.

An­other in­surer also echoed sim­i­lar sen­ti­ments, adding that they are check­ing the sit­u­a­tion on a daily ba­sis.

Care Rat­ings had, on Fe­bru­ary 3, down­graded DHFL’s non-con­vert­ible deben­tures and long term bank fa­cil­i­ties to AA+ from AAA. In all, it re­vised rat­ings for nearly ₹1.2 lakh crore of out­stand­ing se­cu­ri­ties of DHFL on con­cerns over its abil­ity to raise funds at com­pet­i­tive rates.

Since then, the home fi­nancier has also held an in­vestor call to ease any con­cerns. At present, there are no ex­act es­ti­mates of ex­po­sure of in­sur­ers to DHFL.

IL&FS fi­asco

How­ever, af­ter trou­ble arose at In­fra­struc­ture Leas­ing and Fi­nance Com­pany (IL&FS), most in­sur­ers have be­come cau­tious in buy­ing se­cu­ri­ties of non-bank­ing fi­nance com­pa­nies (NBFCs) on con­cerns over as­set-li­a­bil­ity mis­match.

“Most in­sur­ers have be­come cau­tious as the money we in­vest is the money of our pol­i­cy­hold­ers and will have to be re­turned at a later date,” said the first ex­ec­u­tive, adding that now there is a dearth of good in­vest­ment op­por­tu­ni­ties.

IRDAI has al­ready asked in­sur­ers for their ex­po­sure to IL&FS and has said that they will have to make pro­vi­sions for it and it can­not be writ­ten off.

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