FSDC will fill regulatory void, avert ULIP-like disputes: Montek

The Planning Commission today emphasised the urgency of setting up the proposed Financial Development and Stability Council (FSDC) in the light of the differences between the Securities Exchange Board of India (SEBI) and the Insurance Regulatory Authority of India (IRDA) over administration of unit linked insurance policies (ULIPs).

Speaking on sidelines of a function, Planning Commission deputy chairman Montek Singh Ahluwalia attributed the differences in perceptions to regulatory gaps. He, however, said the differences between the two warring regulators have not affected market sentiment.

Ahluwalia, however, said the proposed FSDC also would require to "reworking the system to close these gaps".     

Finance minister Pranab Mukherjee had, in his budget speech, proposed to set up a super regulator to address inter-regulatory issues. The government is yet to finalise the structure of the FSDC.

Ahluwalia attributed the regulatory gaps in the financial sector to the time lags in the development of the different parts of the financial systems.

Ahluwalia's comments assume significance in the light of the continuing spat between SEBI and IRDA over who should control ULIPs, a mutual fund-like product sold by insurance companies.

Capital market regulator Securities Exchange Board of India (SEBI) which lifted a ban imposed on 14 insurance companies on issuing unit linked insurance policies (ULIPs), yesterday reimposed the ban and the Insurance Regulatory and Development Authority of India (IRDA) responded with a fresh call on insurance companies to ignore the ban.