Bill to replace ULIP ordinance soon

NEW DELHI: The government will table a bill in the monsoon session of Parliament to convert into law the controversial ordinance that regulators believe may end their autonomy, a line of thought finance minister Pranab Mukherjee thinks is unjustified.

Details of the planned bill, where normally the devils lie, are not yet known.

“It is matter of a few days when this will be tabled and everybody would know what the future course of action on this particular piece of regulation is,” said finance secretary Ashok Chawla on the sidelines of a conference. The Parliament session begins Monday.

The government stirred a hornet’s nest on June 19 when it announced the promulgation of an ordinance that would form a statutory panel under the finance minister that would solve all disputes on hybrid products between regulators. This was aimed at solving a public spat between the Securities & Exchange Board of India and the insurance regulator over who had jurisdiction on the unit linked insurance plans, the popular investment-cum-insurance products.

But that could probably be used to trespass into the territories of a regulator, depending on the personalities who occupy the treasury, believe many, including the Reserve Bank of India governor.

"We are all aware that both the Prime Minister and you have strong and impeccable commitment to regulatory autonomy," governor Duvvuri Subbarao wrote to Mukherjee. "But we must evaluate the regulatory arrangement... in a long term perspective when personalities change; the misuse of the ordinance is not beyond the realm of possibility for several reasons."

But Mukherjee remained firm on the objectives of the ordinance saying he had no intention to meddle in the functioning of regulators.

"There will be no interference by the government," Mukherjee told reporters in Hyderabad on Tuesday. "The government has no intention to interfere with the autonomy of any regulator."

Although the form in which the bill may be introduced is not clear, it may address the concerns of the regulators, including the market regulator which is opposed to the non-statutory Financial Stability and Development Council that was announced in the last union budget.

“Regulators have raised their points of view. The finance minister has taken note of those issues," said Chawla.

The ordinance, cleared by the cabinet and approved by the Prime Minister Economic Advisory Council headed by former governor C Rangarajan, said Ulips were insurance products that would be regulated by the Irda. But there were no discussions with the regulators.

Currently, inter-regulatory issues are looked into by a High Level Coordination Committee, comprising financial sector watchdogs and finance ministry officials. It is headed by the RBI governor.