India relaxes interest rate derivatives limits for insurers

Insurers now able to hedge out interest rate risk beyond one year

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The decision by the Indian insurance regulator to allow insurers to use long-dated interest rate derivatives has been welcomed by market participants but it is likely to be some time before insurers are able to fully utilise these instruments, they say.

Guidelines released a year ago had previously allowed insurers to enter forward rate agreements (FRAs), interest rate swaps (IRSs) and exchange-traded interest rate futures (IRFs) but only with a maximum tenor of one year.

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