19 Jun 2010

ULIPs and law: An Ordinance and another twist

The Press Information Bureau in a Press Release made today late evening has announced that the President of India has promulgated an Ordinance amending the provisions of the "Reserve Bank of India Act 1934, Insurance Act 1938, SEBI Act 1992 and Securities Contract Regulations Act 1956, thereby clarifying by way of an explanation that Life Insurance business shall include any Unit Linked Insurance Policy or scripts or any such instruments." According to the Press Release, "his would set at rest all the issues regarding ULIPs between two financial regulators i.e. Securities Exchange Board of India (SEBI) and Insurance Regulatory Development Authority (IRDA)". 

In as much as on this blog we had analysed extensive the origin and the issued involved in the tussle in our earlier post and also in as much as we feel that the sorting of issues is not as simple as the press release states, we feel it obligatory on our part to put in words our opinion on the same. We do so, however, with our limitation of inaccessibility to the original text of the Ordianance in as much as the same seems not to have been made public till the time of publication of this post. However we promise our readers an extensive review of the Ordinance as soon as we receive its full text.

Meanwhile, the PIB Press Release also informs us of the following;
Further, for sorting-out all issues of jurisdiction regarding hybrid products, a high level Committee under Chairmanship of Union Finance Minister has been constituted. Finance Secretary to Government of India, Secretary, Department of Financial Services and the Chiefs of four Financial Regulators viz. Reserve Bank of India (RBI), Insurance Regulatory Development Authority (IRDA), Securities Exchange Board of India (SEBI) and Pension Fund Regulatory Development Authority (PFRDA) will be the members of the aforesaid Committee.
Have a look at the Press Release.  

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