Govt asks Sebi, Irda to move court at once on Ulip issue

Concerned over the ongoing public spat between the two regulators, the government on Wednesday asked Sebi and Irda to move court immediately on the contentious issue of who will regulate unit-linked insurance products.

At the same time, Finance Secretary Ashok Chawla did not find anything amiss in Tuesday order by Sebi asking insurers not to issue any fresh Ulips, which some analysts felt was against the status quo ante directed by Finance Minister Pranab Mukherjee on Monday.

"We want them to go to the court at the soonest. Finance minister has mentioned status quo ante, which means that whatever prevailed before the date of the Sebi order will continue unhindered... that is what Sebi has said," Chawla told reporters.

When the fight between the regulators became public on Friday last following the Sebi ordering a ban on 14 insurers from raising fresh equity through Ulip, a move challenged by Irda chairman J Hari Narayan, Chawla had said that it was for the two to settle between them.

"The larger issue on who has the regulatory oversight authority (over ULIPs) will be decided by the court. We want them to go to the court at the soonest," Chawla said. Sebi came out with a second order on the Ulip issue on Tuesday while keeping in abeyance its earlier ban on existing Ulips of 14 life insurance companies, which included those promoted by SBI, ICICI Bank and Reliance Anil Ambani Group.

The market regulator, however, added a new twist to the controversy by asking insurers not to issue any fresh unit linked insurance plans after April 9, 2010 without Sebi registration.