Insurance firms have been directed by the Insurance Regulatory & Development Authority of India (IRDA) to allow policyholders to opt out of the electronic clearance system (ECS) mode of premium payment.

The insurance regulator believes that the move will decrease chances of policies getting lapsed as it will give more freedom to policyholders with regard to payment of premiums.

Under the ECS mode, an insurer deducts the amount of money fixed as premium at a fixed date. In case the account concerned lack the amount of money, the policy lapses.

Circulating its recent decision, the IRDA said, "Life insurers shall allow the policyholders the facility to withdraw from the ECS mode at least fifteen days prior to the due date of ECS submission."

The move will also be of great help given the standard norm of offering a grace period of twenty to thirty days without penalty.

The insurance also relaxed investment norms for the housing finance and infrastructure finance firms. Further, the insurer raised the single investee debt exposure cap in housing finance firms from current 10 per cent to 20 per cent of the firm's equity.