The government will soon find an out-of-court solution to the turf war between two regulators, SEBI and IRDA, which has made India a "laughing stock", top banker Deepak Parekh said on Sunday.
At the same time, he hit out at the government for allowing the capital markets and insurance regulators to go to the courts, saying a rethink on the their fight over jurisdiction on Unit Linked Insurance Products would lead to a solution in the next few days.
Parekh, a key adviser to the government on various policy matters, however, replied in the negative when asked if the settlement was based on his counsel.
"Tell me, where in the world you see two regulators fighting... we have become a laughing stock," the HDFC Chairman told PTI in an interview, adding that the Finance Ministry would find a solution in the next few days and the court cases would be withdrawn.
Following a public spat between capital market regulator SEBI and insurance sector watchdog IRDA on which of the two should regulate ULIPs that invest heavily in stock and bond markets, the Finance Ministry last month announced that the issue should be resolved by an "appropriate court."
The issue has already reached the courts and the Supreme Court late last month posted the matter for hearing on July 8, following a petition filed by SEBI.
"Both SEBI and IRDA have good points in their favour. (But), both will have to climb down and a solution lies somewhere in between," said Parekh, who has served as a member of various government appointed committees and advisory panels, including those related to financial services.
The spat broke out in early April when SEBI banned 14 life insurance companies from raising funds through ULIPs and with the very next day IRDA asking the companies to ignore the SEBI order and do business as usual.
These insurers included HDFC Standard Life, the life insurance venture of HDFC group, which is already engaged in mutual fund business through HDFC Mutual Fund.
"We are into both insurance and mutual fund business. We're suffering from the both sides and both the regulators have their own points (in this issue)," Parekh told PTI in Mumbai.
"A decision will be taken by the Finance Ministry in the next few days. Probably, the government came to the feeling that the courts would take a long time (to resolve the issue). The issue should not have gone to the court in the first place," he said.
After the two regulators petitioned Finance Ministry, Finance Minister Pranab Mukherjee had said on April 12: "To resolve any ambiguity and to ensure smooth functioning in the market, the regulators have agreed to jointly seek a binding legal mandate from an appropriate court."