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Putting an end to the turf war between the insurance and securities market regulator, the Centre has issued an ordinance that brings all insurance products including unit-linked insurance policies (Ulips) under the purview of the Insurance Regulatory and Development Authority (IRDA). The ordinance also entails the setting up of a committee chaired by the finance minister to settle inter-regulatory or turf issues relating to hybrid financial products. This committee will include members of all four financial sector regulators.According to sources, even though it was not part of the cabinet agenda, the Securities and Insurance Laws (Amendment and validation) Ordinance, 2010 was cleared at the meeting of the Union cabinet on June 17. The ordinance also states that products approved by IRDA and pension watchdog PFRDA would not fall under the purview of SEBI.Sources told The Sunday Express that the ordinance, which was prepared by the union law ministry on the orders of finance minister Pranab Mukherjee, allows the government to constitute a body to resolve inter-regulatory disputes such as the recent ones. This committee would be chaired by finance minister Pranab Mukherjee and include the RBI governor, the union finance secretary, chairpersons of SEBI, IRDA and the Pension Fund Regulatory and Development Authority (PFRDA) as members. Among other things, the panel would address jurisdictional issues between the regulators and also ensure better coordination so as to protect investor interest.Through this ordinance, the government has plugged in all the loose ends that led to the turf war between IRDA and Sebi starting April this year. The ordinance has made suitable amendments in the Insurance Act 1938, the SEBI Act 1992 and the Securities Contract Regulations Act 1956 to ensure that insurance products remain under the jurisdiction of IRDA. "We have expanded the definition of insurance in the Insurance Act to include unit-linked insurance policies in it. Also, in the SCRA Act, we have made it clear that all unit-linked policies will be supervised by IRDA and lastly in the Sebi Act, we have added an explanation saying that collective schemes do not include unit-linked policies," said an official in the ministry of finance.
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