For the time being, investors as well as insurance companies can breath easy. Thanks to Finance Minister Pranab Mukherjee‘s mediation, status quo has been restored as far as the popular unit-linked insurance products (ULIPs) are concerned.
“Status quo ante has been restored on ULIPs,” Mukherjee was quoted as saying to the reporters in New Delhi after holding a meeting with the chairpersons of SEBI and IRDA.
Both the regulators, who are fighting tooth and nail with each other over ULIPs, would now jointly approach court to resolve the impasse for them. Insurance companies can continue to sell ULIPs till the court delivers its legally binding verdict on the contentious issue.
“To resolve any ambiguities and to ensure smooth functioning in the markets, the two regulators have agreed that they will jointly seek a binding legal mandate from an appropriate court,” Mukherjee is believed to have said.
Earlier today, SEBI chairman C.B. Bhave and IRDA chairman J. Hari Narayan met Finance Secretary Ashok Chawla and other Finance Ministry officials separately to present their case on the matter.
“Existing policy holders are completely safe, their claims and products are safe… there is no cause for anxiety at all,” IRDA Chairman, Harinarayan reportedly told media persons in the capital.
Though the two regulators have had differences for a while over the issue of who should regulate ULIPs, the same reached a flashpoint last weekend.
SEBI on Friday announced a ban on sales of ULIPs by 14 private insurance companies, saying they needed to register with the capital markets regulator before selling these products. Reports suggested that SEBI may impose a similar ban on nine other insurance companies, including LIC.
The IRDA on Saturday issued an order asking all insurance companies to continue selling ULIPs.
ULIPs are similar to mutual funds with an added life cover.