Capital markets regulator Securities and Exchange Board of India, or SEBI, has issued a showcause notice to an insurance company, learns CNBC-TV18 quoting sources.
This comes in the wake of insurance companies transgressing into the mutual fund territory, report CNBC-TV18's Mrinalini Krishna and Avni Raja.
SEBI has sought an explanation from the company asking why one of its insurance products does not have an insurance cover and whether this amounts to selling mutual funds.
SEBI, which is the regulator for mutual funds, has sought information on whether the insurance company is selling a mutual fund product in the name of insurance.
Meanwhile, sources close to the insurance regulator, Insurance Regulatory and Development Authority or IRDA, have clarified that this is an annuity product and comes under the purview of the IRDA as specifically mentioned in the Insurance Act.
Annuity products do not have a life cover but have a survivor benefit, which is why sources say, that this is not like a regular insurance product with a life cover. Sources at IRDA said that SEBI has written to the IRDA, which inturn has clarified the details to SEBI.