Finance Ministry says SEBI nod not needed for ULIP sales

NEW DELHI Sat Jun 19, 2010 8:32pm IST

A man shows balloons in the colours of the Indian flag to his child at a market during Independence Day celebrations in Chandigarh August 15, 2008. REUTERS/Ajay Verma/Files

A man shows balloons in the colours of the Indian flag to his child at a market during Independence Day celebrations in Chandigarh August 15, 2008.

Credit: Reuters/Ajay Verma/Files

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NEW DELHI (Reuters) - The finance ministry said on Saturday life insurers could sell unit-linked insurance plans (ULIPs) without seeking a nod from the capital markets regulator, ending a spat between regulators over the hybrid products.

The presidential decree permitting such sales went into force late on Friday, the finance ministry said in statement. Under the law, such orders issued when parliament is not in session must be confirmed by lawmakers in their next sitting.

The capital markets regulator and the insurance regulator had locked horns on who should regulate ULIPs, mutual fund instruments with an added life cover, given the products combined insurance and investments.

The Securities and Exchange Board of India (SEBI) had in April barred 14 life insurance companies from selling ULIPs without its approval. The Insurance Regulatory Development Authority (IRDA) argued SEBI had no authority to do so.

After the finance ministry intervened, the two decided to maintain the status quo.

"Life insurance business shall include any Unit Linked Insurance Policy or scripts or any such instruments. This would set at rest all the issues regarding ULIPs between two financial regulators," the finance ministry said in the statement.

Parliament will next meet for the monsoon session, which generally starts in July.

(Reporting by C.J. Kuncheria; editing by Patrick Graham)

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Comments (4)
aditya.kalra wrote:
This is sad news.. Advisers would continue to sell ULIPs which have extremely high charges.. Good for agents, bad for investors. They should be banned. Why not just invest in MFs which have zero entry load and have an awesome track record?

Jun 19, 2010 8:44pm IST  --  Report as abuse
IndianCitizen wrote:
It shows how helpless is the government before the powerful insurance lobby. Govt. has kneel-down before the money trickster (ULIP Sellers) by bypassing the law enacted by parliament giving the powers to SEBI & related rules & regulations prescribed under SEBI Act. More over when existing ULIP’s were permitted to be sold as earlier & the matter was sub-judice before the Supreme Court, what prompted the need for such a hasty ordinance. Govt. owes an explanation to Retail investors/ people of India as to why Insurance was nationalized in past and what they or IREDA is doing to prevent the repetition of those situation(s) in future & also to safe guard the interest of investors of ULIP.

Jun 19, 2010 11:54pm IST  --  Report as abuse
amma wrote:
MR.aditya.kalra – do you know the basics of ULIPs? Mutual funds doesn’t give any life insurance cover. When you want Life cover mixed with high returns ULIP is the only option for those who dont know how to trade in stock markets.

Jun 21, 2010 4:07pm IST  --  Report as abuse
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