The Finance Ministry has put the Sebi order on Ulips in abeyance.
It has asked both Irda and Sebi to approach the court at the earliest.
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(Updated at 1536 hrs)
Sebi chairman C B Bhave and IRDA chief J Harinarayan had separate meetings with Finance Secretary Ashok Chawla today on the ongoing tussle between the two regulators over equity-linked insurance schemes.
The differences between the two regulators over administration of the Unit Linked Insurance Products (ULIPs) are likely to be resolved by this evening, IRDA chief Harinarayan indicated after his meeting with Chawla.
"I think yes," Harinarayan said, when asked whether the differences, that led to the piquant situation of one regulator turning down the order of the other, could be sorted out by this evening.
There would be more meetings, he said, adding "they (Finance Ministry officials) listened to what we had to say. Finance secretary wanted to understand our prespective... Sebi chairman was not with me".
No comments could be obtained from Bhave.
On late Friday night, Sebi banned 14 life insurers, including Reliance Life, SBI Life ICICI Prudential and Tata AIG, from raising fresh money for Ulip schemes that invest a major chunk of funds in stock markets.
The order, however, did not cover state-owned Life Insurance Corporation and eight other private insurers.
IRDA on its part questioning Sebi's authority asked the 14 companies to continue business as usual.
"We need to look at both the orders internally and discuss it," Finance Secretary Ashok Chawla told reporters earlier in the day.
The IRDA Chairman, Harinarayan said, "He apprised the government of the situation and (explained) why it was necessary for IRDA to step in and issue the order in the interest of policy holders...(also) to assure there is no unseemly concern on negative expression in the market and market behaviour."
When asked whether IRDA has powers to quash Sebi order, Harinarayan said, "I don't have any power to quash Sebi's order, but I certainly have the powers to direct insurance companies (what) to do or not to act."
He added IRDA had two rounds of discussion with Sebi but the market regulator did not resile from its position.
Harinarayan also said that existing policy holders "are completely safe, their claims and products are safe... There is no cause for anxiety at all".
On money still trickling in the ULIP schemes, he said, "I would hope so."
Before meeting Chawla, Harinarayan told reporters, "I don't think I have come here for a decision. I am here to give a perspective on the issue. Sebi does not have jurisdiction on Ulip products, (though) Sebi believes otherwise."
The decision of SEBI, he had said, would "have a negative implication on the financials of policy holders and insurance companies".
ULIPs--a common insurance plan sold by life insurers, where the money collected from consumers is invested into equity and debt markets-- have become a bone of contention between the two financial regulators, with both claiming regulatory authority over the scheme.