The government today informed the Rajya Sabha that it has asked Sebi and Irda to expeditiously get a binding legal order over the jurisdiction of unit-linked insurance products (Ulips). “The Sebi has moved the Supreme Court seeking transfer of various proceedings pending before the high courts …So that the highest court of the land can determine and settle these disputes,” minister of state for finance Namo Narain Meena told the Upper House in a written reply.
The insurance regulator Irda and market watchdog Sebi are locked in a turf war over control of Ulips, which are in investment products but issued by insurance companies. The issue began last month when Sebi restrained 14 insurance companies from raising money from Ulips without obtaining registration from the market regulator. Irda later responded to the Sebi directive by asking the insurers to ignore the order and continue with business as usual.
The insurance regulator, Meena said, “is of the view that the mandate to regulate insurance products, irrespective of their nature, rests with the Irda.”
After the finance ministry brokered a peace between the two regulators, Sebi relaxed its earlier order and decided to restrict the ban on only new Ulips schemes launched after April 9, 2010.
Later, the market watchdog Sebi moved the Supreme Court to transfer all cases pending in different high courts and resolve the issues raised in different petitions.
“Since Sebi has clarified that its order has been kept in abeyance with respect to Ulips existing on the date of the order (April 9, 2010), existing investors to these schemes will not be adversely affected,” Meena said.
There is already a precedence and a procedure found to be in order by the Supreme Court to be very effective in resolving such differences. That is, the reference to the CoD, to which the disputes between the income tax deptt. and PSUs are referred to as per the binding order of the apex court. Why is the Govt. fighting shy of adopting the same procedure in this case?