The fight between the market regulator Securities and Exchange Board of India (SEBI) and the insurance regulator Insurance Regulatory and Development Authority (IRDA) over the unit linked insurance products (ULIPs) intensified on Saturday and is likely to enter the courtroom.
Sebi passed an order on Friday restraining 14 life insurance firms from raising additional money from investors for any product till they get registered with Sebi. On Saturday, IRDA hit back by first saying that it will go by the law, but later issued a statement asking firms to continue selling ULIPS.
IRDA has said Sebi’s order will ‘seriously jeopardise’ and adversely impact the interest of the policyholders and insurers.
Market experts say Sebi has a strong case. “Just in case the insurance companies continue to collect funds for ULIPS, Sebi can ban their participation in capital markets,” said an expert on condition of anonymity.