On December 29, CNBC-TV18 had reported that market regulator Securities and Exchange Board of India (SEBI) had issued a showcause notice to HDFC Standard Life for one of its annuity products. SEBI was likely to issue further notices to companies, it was reported.
Now, SEBI has issued showcause notices to a number of insurance companies over their unit linked insurance plans (ULIPs). CNBC-TV18’s Avni Raja reports.
A number of companies including Bharti AXA Life, Bajaj Allianz, Max New York Life and Aviva Life have confirmed to CNBC-TV18 that they have received notices on the matter.
Confirming the development, an official at Bharti AXA Life said, “We have received a letter from the SEBI inquiring about some of our unit linked products. Since we learn that many other life companies have also received such a letter, we are referring this issue to Life Council and to [insurance regulator] Insurance Regulatory and Development Authority (IRDA).”
Sources close to the development say other companies — LIC, ICICI Prudential, Kotak and Birla Sun Life — are also likely to receive show cause notices from SEBI.
The showcause notice says that ULIPs fall under the "collective investment scheme" category, which are largely investment accumulation products. As per Section 12 1(b) of the SEBI Act, these products require SEBI’s approval.
The insurance regulator, IRDA, says that no company is in violation of any regulatory requirements.
It does not agree with the SEBI view that ULIPs require multiple regulatory approvals. All the insurance products that have been approved by the IRDA fall well within the purview of Section 2 (11) of the Insurance Act, IRDA has said, adding that the issue may require intervention from the Finance Ministry.
Source: CNBC-TV18Courtesy moneycontrol.com
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