On Mar. 10, IND INS permitted use of bond forwards for hedging.
IND INS permitted insurers to undertake transactions in bond forwards for hedging, given IND RBI allowed eligible non-retail entities to participate in bond forwards.
Insurers currently allowed to hedge interest rate risks using forward rate agreements.
In addition, through interest rate swaps, and exchange traded interest rate futures.
Condition for Insurers
Insurers may only take long positions (buy), excluding unit linked insurance plans (ULIP) business; must comply with conditions set out in IND INS Master circular on IRDAI (actuarial, finance and investment functions of insurers) regulations, 2024.
Including permitted purpose, prudential norms, documentation, accounting, risk management, suitability, corporate governance, as well as CRO responsibilities.
Transactions in bond forwards must be reported quarterly; adhere to RBI guidelines on bond forwards as amended periodically; and comply with guidelines issued by IND FIA.
