Life Insurance Corp. of India’s (LIC’s) bid to buy 15% in India International Exchange (IFSC) Ltd (India INX), a stock exchange located in Gujarat’s GIFT City, has been blocked by the insurance regulator over a clause in the Insurance Act that bars insurers from acquiring overseas companies, two people directly aware of the matter said
According to the Insurance Regulatory and Development Authority of India (IRDAI)’s interpretation, the GIFT or IFSC is a foreign jurisdiction, and thus companies in IFSC are outside India, said the second person, also requesting anonymity.
“No insurer shall directly or indirectly invest outside India the funds of the policyholders,” according to Section 27E of the Insurance Act 2015.
In the case of LIC, the funds belonging to policyholders and shareholders are not bifurcated, which has complicated the problem.
“The exchanges have made some representations to the regulator and LIC, stating that the exchanges are set up under India’s Companies Act, 2013, so technically they are Indian companies and not overseas entities. However, the regulator has not accepted this argument,” said the first person.
IRDAI red-flags LIC investment in IFSC
