First SLB Trade in Indian Insurance Sector

The first trade in the insurance sector in India has been launched, between ICICI Prudential Life Insurance with Edelweiss Securities, based on the new Securities Lending and Borrowing (SLB) scheme.

The Insurance Regulatory and Development Authority (IRDA) launched the SLB last month to enable securities that have been sold short to settle.

Securities can be borrowed for a period of seven days through screen-based order matching mechanism, reports the Business Standard. The tenure for SLB transactions is up to 12 months and allows insurers to lend up to 10% of equity in any equity holding of a specific entity held, it added.

Puneet Nanda, executive director, ICICI Prudential Life Insurance was quoted in the Business Standard report as saying: “Life insurance companies are long-term investors and the new Irda regulation has opened up an avenue to generate additional yield. This, we believe, will enable us to provide even better risk adjusted returns to our policyholders.”