SEBI restrains 14 insurance companies from raising fresh money

April 10th, 2010 - 3:09 pm ICT by ANI  

New Delhi, Apr 10 (ANI) The Securities and Exchange Board of India (SEBI), on Saturday restrained 14 insurance entities from raising fresh money through Ulips - Unit Linked Insurance Products.

The SEBI said in its website, that the insurance companies need its approval before launching any product with an investment option.

There is already a tussle on the subject between SEBI and the Insurance regulatory Development Authority (IRDA), on who had the jurisdiction to regulate Ulips and, by extension, any other insurance product with an investment component.

The insurance companies named in the SEBI order are Aegon Religare, Aviva, Bajaj Allianz, Bharti AXA, Birla Sun Life, HDFC Standard Life, ICICI Prudential, ING Vyasa, Kotak Mahindra Old Mutual, Max New York Life, Metlife India, Reliance Life, SBI Life and TATA AIG Life.

SEBI member Prashant Saran issued the 11-page order, which takes effect immediately.

“It is… necessary to restrain the entities… from raising further monies/subscription, new and/or additional, from the investors for any product (including Ulips) having an investment component in the nature of mutual funds till they obtain registration from SEBI,” says the order.

According to SEBI, many characteristics of Ulips push it under its purview.

“The product is unit-linked and money is raised from the public through sale of units to them… premium will be used to allocate units in the fund chosen by the investor… the product has characteristics such as fund management, charges, switch and partial withdrawal options,” SEBI order stated.

“The attributes of the investment component of Ulips launched by these entities are akin to the characteristics of mutual funds, which issue units to the investors and provide exit at net asset value of the underlying portfolio,” order added.

Some of these insurance companies sought a personal hearing, which was rejected by the SEBI. (ANI)

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