Aug 2: The government finally passed on Monday the Securities and Insurance Laws (Amendment) and Validation Bill, 2010 – popularly known as the Ulip bill.
The bill has two key features. Firstly, it states that Ulips — unit linked equity plans — will be regulated by insurance sector regulator IRDA and not the stock market regulator Sebi. The two regulators had a public spat over the regulation of Ulips, which started in April when Sebi barred several insurance companies from selling these products. Secondly, the bill establishes a committee – headed by the finance minister with the various regulators as its members, to resolve such issues in case of ‘hybrid’ financial products. Ulips are one such hybrid product.
The government has also tried to allay fears that this body would be a ‘super-regulator’ that would affect the autonomy of exisitng regulators. The RBI had earlier expressed apprehension that its autonomy would be jeopardised, if it was treat at par with other regulators in the joint body. “There were lots of apprehensions whether we are going to dilute the regulators’ independence or auto-nomy. But it will only be in the case of jurisdiction disputes between the regulators that the mechanism will be used,” he said.