FM restores status quo on ULIP issue, seeks legal verdict
12 Apr 2010
Finance Minister Pranab Mukherjee has restored the status quo on unit-linked insurance schemes (ULIP), reports CNBC-TV18's Rituparna Bhuyan and Vivek Law. The Minister has sought a legally binding verdict from the courts on ULIPs. "Both IRDA and SEBI have agreed on a legally binding verdict on ULIPs. The earlier order by SEBI has been taken back," he said.
On Friday, SEBI had banned 14 entities from selling ULIPs. But IRDA fought back and asked insurance companies to disregard the order.
Banking Secretary R Gopalan said IRDA and SEBI are likely to jointly go to court on the ULIP issue. "We cannot say by when the court will resolve the ULIP issue. But want IRDA and SEBI to go to court as soon as possible."
What could have transpired at the meet?
CNBC-TV18's National Editor Vivek Law reconstructs what he believes could have happened in the meeting with the FM.
On it's part, SEBI could not have taken back it's order, simply because the SEBI order is quasi-judicial, that is, once issued, cannot be taken back and must necessarily be sorted in court.
On the other hand, IRDA would have stood it's stand and refused to agree for a dual regulatory system.
What this essentially means is that the issue is now judicial and can only be settled in the court of law.