Govt weighs 50-yr bonds to deepen insurance mkt

Insurance sector needs up to ₹50,000 cr; new bonds to give bigger financial cushion

- Subhash Narayan & Rhik Kundu

The Indian government may consider issuing 50-year on-tap bonds in the next fiscal (FY26), in a bid to encourage insurance companies to subscribe and better manage their business, two people familiar with the matter said.

The move, under consideration of the Union finance ministry, with the help of the Reserve Bank of India (RBI), would also help the government nudge the industry towards its target of insurance for all by 2047, these people said on the condition of anonymity.

Investing in these 50-year on-tap bonds would provide insurers with a stronger financial cushion needed to operate a business that handles long-term contracts. Life insurance companies, for instance, give out policies that may span decades.

Insurance companies use money from premiums collected—and their reserves to invest in bonds and equities. Typically, they invest the bulk of the monies in fixed-income instruments like bonds so that the assured interest income can help them manage customer claim payouts as well as operational expenses and business expansion over a long period.

The extended maturity of the 50-year bonds would provide the stability and predictable returns that are essential for insurers managing large policyholder obligations, the people cited above said.