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The government on Monday said that the two regulators, the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority, have agreed to maintain the status quo that existed before market regulator's ban on 14 life insurers from raising funds for unit-linked schemes.
The status quo will be maintained till a court decides who can regulate ULIP schemes, Finance Minister Pranab Mukherjee told reporters in New Delhi.
ULIP is an insurance product in which a bulk of the premiums is invested in equities and bonds.
"To resolve any ambiguity and to ensure smooth functioning in the market, the regulators have agreed to jointly seek a binding legal mandate from an appropriate court," Mukherjee said.
"Meanwhile, status quo ante is being restored," he told reporters outside the finance ministry.
Mukherjee's comments came after a series of meeting between finance ministry officials and IRDA chairman J Hari Narayan Sebi chief C B Bhave.
Sebi last Friday banned 14 life insurance companies from raising funds through unit-linked insurance policies.
A day later, insurance sector regulator IRDA asked the companies to ignore the Sebi order and do business as usual.
The ball had since gone into the finance ministry's court. Bhave and Hari Narayan held separate meetings with finance secretary Ashok Chawla on the ongoing tussle between the two regulators.
The life insurance companies against whom Sebi passed the order are SBI Life, ICICI Prudential, Tata AIG, Aegon Religare Life, Aviva Life, Bajaj Allianz, Bharti AXA, Birla Sunlife, HDFC Standard Life, ING Vysya Life, Kotak Mahindra Old Mutual Life, Max New York Life, Metlife India and Reliance Life.