Insurance Regulatory & Development Authority (Irda) Chairman J Hari Narayan on Friday acknowledged the difference of opinion with the capital market regulator on regulating unit-linked insurance plans (Ulips) and called for clarity on aspects that can result in regulatory overlap.
“There is difference of opinion between our understanding of what Sebi (Securities and Exchange Board of India) remit is and what Sebi believes its own remit is,” Hari Narayan said in his first public comments on the controversy. Sebi Chairman CB Bhave did not comment.
Asked to comment on the issue at the Business Standard Insurance Round Table here, Hari Narayan said having multiple regulators for the same issue might not be healthy for the system. He said all the regulators were working to ensure customer satisfaction, investor protection and financial stability. The issue of regulating Ulips became controversial in January after Sebi issued notices to life insurance companies saying the structure of these products was similar to mutual funds and that these were in the nature of collective investment schemes, which come under its purview.
Irda, which also received a letter from Sebi, shot back saying the regulatory architecture was clearly defined and it was authorised to regulate Ulips under the law. Subsequently, Irda and Sebi officials have held two rounds of discussions but are yet to reach an agreement.
“In Indian regulatory architecture, what different regulators will do is well defined by law. In India, we have enacted for ourselves a system where each one of these is separate. The scope of regulatory overlap in our view is limited because they (regulators) act very carefully within the limits,” said Hari Narayan.
“We do believe that in things of this nature, a greater clarity will be helpful and prevent multiple regulators on a given field. I think having multiple regulators won’t be healthy for either the customer or the industry,” said the insurance regulator.