Indian Insurers Push Back on Capital Rule for State Bonds

Indian insurers asked their regulator to soften a proposal that requires them to set aside capital when they buy state bonds, warning it would make the debt less attractive to own, according to people familiar with the matter.

In written feedback to the Insurance Regulatory and Development Authority of India through an industry body, companies asked to reduce or remove the planned capital requirement tied to such bonds, said the people, who asked not to be identified as the information is private. The sticking point is the so-called risk factor, which determines how much money insurers must set aside as a safety cushion in case the value of the bonds declines.