Who governs whom?

In India, bureaucracy is known for feuding. Most of the union government and state ministry bosses are known for their notoriety. With the issuance of notices to 13 insurers by SEBI, the security and exchange board of India the IRDA; the insurance regulatory development authority was annoyed. According to IRDA, these insurance companies are not under regulatory control of SEBI though they do invest big chunk of the money collected under the popular insurance product ULIP. The ULIP offers insurance cover as well as investment in select scrip. The buyer of ULIP need not pay the premium after certain number of years. If market does not perform as per expectation ULIP policy taker has to either top up the plan amount or has to loose the insurance cover benefits.
The recent feuding between SEBI and IRDA cannot be treated the typical example of bureaucratic notoriety so common in India. SEBI feels that if insurer sales the mutual fund type insurance policies they must be registered with SEBI because the insurance business is nothing but a mutual fund business in disguise. This business involves the gross issues of investments. For example, like charging commissions (Entry load, exit load etc.) are the issues, which needs the attention by SEBI. The SEBI chief C B Bhave who is due to retire in the month of August is very docile person. He is equally upright and known for eye for details. He is never victim of small talks or sort of grapevine in stock market. The disciplined development of insurance business, a comparatively new crop in India, is the responsibility of IRDA. With the end of government monopoly in insurance business, India is very much kin to have healthy growth of business. If IRDA fails, government feels, economy may have to face unnecessary trouble.
Although the Government has advised both the authorities to seek the court verdict, it is clear from the finance minister’s statement that Behave may be backed by Government if situations so demand. Investor is synonym god for government of India; therefore, any step taken in the interest of investor is welcome. Finance Minister Mukherjee desires the mutual fund industry in the country should grow on the line of mutual fund industry in USA. On this background, SEBI has to keep its order in abeyance. Bhave refused to comment and preparing to fight in Supreme Court of India.
-Ramesh Zawar
Senior Journalist