Encumbrance, charge or hypothecation of Assets forming part of Controlled fund :

All assets forming part of Controlled fund to be kept of free of any encumbrance or charge except to the extent not exceeding 1/10th of the controlled fund, subject to such conditions as may be prescribed by IRDA. Such charge or encumbrance can be created only for the purpose of a loan taken by an insurance company for the purpose of any investment. However, Government Securities and Approved Securities forming part of the Controlled fund cannot be subject to any charge or encumbrances

Note: Controlled Fund is defined as all funds pertaining to life insurance business, except for any part of the fund in respect of which IRDA is satisfied that it would not be in the interests of the insurer to apply the provisions of Section 27A.