In a major relief to ULIP holders and insurance companies, government on Monday stepped in to ensure that the business of selling equity-linked insurance plans can go ahead as before while the two clashing regulators have decided to approach the court for sorting out the dispute.
The Finance Ministry's intervention comes after the two regulators SEBI and IRDA clashed with each other over regulating the Unit Linked Insurance Products (ULIPs).
SEBI chairman C B Bhave and Insurance Regulatory and Development Authority (IRDA) chairman J Harinarayan rushed to Delhi and held discussions with senior officials and Finance Minister Pranab Mukherjee before the two sides agreed to seek a "binding legal mandate".
"SEBI chairman and IRDA chairman today held discussions on jurisdiction over ULIP (Unit Linked Insurance Products).
"To resolve any ambiguity and to ensure a smooth functioning in the market, the regulators have agreed to jointly seek a binding legal mandate from an appropriate court. Meanwhile, status quo ante is being restored," Finance Minister Pranab Mukherjee told reporters after the discussions.
When asked what could be the appropriate court, Finance Secretary Ashok Chawla said, "I believe the High Court." While the SEBI is headquartered in Mumbai, IRDA is based in Hyderabad.
On Friday, SEBI banned 14 life insurance companies from selling ULIPs till they obtain registration from the market regulator. Within 24 hours, IRDA asked the companies to ignore the SEBI ban order and continue with business as usual.