The finance ministry has again called a meeting of the two feuding regulators to discuss the progress the two have made in resolving the dispute over the regulation of unit-linked insurance products of insurance companies.
The meeting assumes importance after SEBIs recent petition to Supreme Court for bundling of a number of public interest litigation filed in various high courts had raised doubts if the two regulators had deviated from the finance ministry-brokered agreement and decided to seek separate remedies.
We just want to take stock of the progress achieved so far on the agreement reached between the two regulators, a ministry official said. SEBI and the insurance regulator IRDA had agreed to jointly seek a binding legal mandate from appropriate court in agreement thrashed out following an intervention by the finance ministry.
While SEBI has taken an opinion from attorney general, IRDA has taken external advice. Both are expected to soon approach a high court to get the issue resolved, which looked to be escalating again after SEBI moved Supreme Court.
IRDA had declined to become a party in the market regulator SEBIs plea before the apex court for bundling of the many public interest litigations moved in the high courts. Market regulator had approached the apex court as only it can decide on bundling.
The official dismissed the suggestion that the regulators had deviated from the arrangement brokered by the finance ministry. They will approach a high court under Section 90 of the Civil Procedure Code (CPC), 1908 to resolve the dispute on the oversight of ULIPs.
Section 90 of the CPC says that if a person agrees in writing to state a case for the opinion of the court, the court will try and determine the same in the manner prescribed.
On April 9, market regulator SEBI had banned 14 insurance companies from selling unit-linked insurance plans or ULIPS without its approval, saying they needed to register with the market regulator as these were essentially mutual fund type of products.
IRDA, however, asked the insurance companies, which it oversees, to continue selling unit-linked plans, escalating a regulatory crisis that had been simmering for a while.
The finance ministry had made several attempts in past and held deliberation with both the regulators for a resolution. The issue even figured several times at the high level coordination committee on financial markets that has all financial sector regulators as members, but the deadlock continued escalating to a public display of turf war.