Market regulator SEBI has banned 14 life insurance companies, including those belonging to Tatas, SBI, ICICI, HDFC and Reliance Anil Ambani group from raising funds through unit linked schemes, a move on which insurance regulator feels that the firms should take legal recourse.
Many of the affected companies said they would talk to both SEBI and IRDA on the issue, which has emerged as a bone of contention between the two regulators.
Reacting to the order, IRDA Chairman J Harinarayan said, "I don't think their (SEBI's) position is well founded." Insurance companies have to take legal recourse since the order was issued against individual companies and IRDA is not party to it, he said.
Rejecting the arguments by insurance companies that ULIP schemes are insurance products, a view endorsed by IRDA, market regulator SEBI issued the order late last night.
"...in exercise of the powers...I hereby direct ... the (14) entities not to issue any offer document, advertisement, brochure soliciting money from investors or raise money from investors by way of new and/or additional subscription for any product (including ULIPs) having an investment component in the nature of mutual funds."
Secretary General S B Mathur of The Life Insurance Council-- an industry association of life insurers-- told PTI, "we will take it with the regulator on Monday."
The players who have been prohibited from raising any further money include big players like SBI Life Insurance Company, ICICI Prudential Life, Reliance Life, Metlife India, Aviva Life, Tata AIG Life, etc.
However, state-owned insurer LIC is not named in the order, which further said in case these entities wanted to raise funds through any such schemes they would have to obtain the requisite certificate of registration from SEBI.
The Order was issued by SEBI whole time member Prashant Saran, said.