IRDA calls for data on ULIPs

ULIPs have been a major contributor to new business premium income of life insurance companies.

According to sources in insurance companies, the objective of the regulator is to find whether the equity market crash has triggered a large-scale redemption of such products.

The insurance regulator feels that the panic among retail investors triggering a redemption pressure can result in a strain on liquidity for insurance companies.

"The regulator has acted proactively to collect the data so as to have an assessment of the situation before the redemption actually starts," the source said.

Sources in insurance companies said they have already received redemption requests from their policy holders but not on a very large scale.

Meanwhile, private sector banks with heavy exposure to equities have started extending temporary overdraft facility to broker clients to pay margins to stock exchanges for their positions.

However, no bank has availed of liquidity support offered by the Reserve Bank of India (RBI) since there is enough liquidity in the system. The RBI absorbed around Rs 65,000 crore from the system today through its reverse repo window.