Insurance companies will have to make provisions for their exposure to the crippled infra lender Infrastructure Leasing & Financial Services (IL&FS), the IRDAI said yesterday.

They have to make provisions as the exposures cannot be written off, IRDAI chairman Subhash Chandra Khuntia told reporters on the sidelines of an event organised by the Insurance Brokers Association. He did not elaborate.

The IL&FS group with debt of over INR940bn ($13bn), has defaulted on its financial obligations since August and has also borrowed from insurance companies, reported The Economic Times.

The extent of the exposure of the industry to the group has not been published even though the IRDAI had in September 2018 directed insurers to declare their exposure.

Pension funds have also invested or lent money to IL&FS and face the spectre of losing thousands of crores of people's nest eggs. State run LIC is the largest shareholder in IL&FS in which the life insurer holds a stake of 25.34%.

The Serious Fraud Investigation Office submitted its interim report on IL&FS last December, pointing out irregularities in corporate governance and also the factors that triggered the payment defaults, including gross mismanagement and misrepresentation.