SEBI 2

A Max New York Life spokesperson said, "We have not
received any communication from SEBI. We would not comment on
this news on SEBI's ban on ULIPs of some of the life insurers
without receiving any communication from SEBI."
Many other insurance companies officials, on the
condition of anonymity, said they would approach IRDA on the
issue before taking any call.
Earlier in January, SEBI had issued a notice to these
companies asking why they did not seek its permission before
offering ULIP schemes.
That time IRDA member R Kannan had said, "All the
products sold are within the insurance regulation and it is a
global practice."
When asked whether the issue was taken up before the High
Level Coordination Committee (HLCC)-- an inter-regulatory body
on financial markets-- Harinarayan said it came up before
HLCC, which directed that the matter should be resolved
between the two regulators.
Unlike conventional plans, ULIP schemes are financial
products that offer life insurance as well as investment like
a mutual fund. But, whether they could be considered as a
mutual fund is at the centre of the heated debate between SEBI
and insurance companies.
In a reply to the notices sent by SEBI, insurance
companies said that ULIP is a life insurance product and not
covered under the definition of "securities" under the
Securities Contracts (Regulation) Act, 1956.
To buttress their contention, they said the predominant
feature of a ULIP is insurance cover, which is dependant on
human life and the mere existence of an additional investment
feature cannot convert a ULIP into a mutual fund.
They further contended that ULIPs have a mandatory
insurance cover, which forms a vital and inseparable part of
the product.
Unlike mutual fund schemes, the products are interlinked
with the life of the policy holder, these companies added.
In its reply to SEBI's notice to insurance companies
earlier, IRDA is also understood to have taken the stand that
regulation of ULIPs by IRDA was well laid down and that it did
not agree with SEBI's contention that insurers needed a
certificate of registration from the market regulator for
dealing in ULIPs.
However, Saran in his order said, "I conclude that ULIPs
offered by the said entities are a combination of investment
and insurance and, therefore, the investment components are in
the nature of mutual funds, which can only be offered/launched
after obtaining registration from SEBI." MORE PTI