What will be the outcome of the Sebi ban on ULIPs?
1. The Life insurance industry even singly is far more stronger than SEBI.
2. Implication of (1) is most Chairmen of insurance companies can pick up the phone to a Central Cabinet minister, – and most of them can reach the Finance Minister or the Home Minister.
3. Sebi will eat crow, and the order will become a piece of bhel puri wrapping paper.
4. There could be a compromise saying a copy of the proposal should also be filed with SEBI while applying for a new scheme, and SEBI will automatically approve it in 3 weeks.
5. Sebi guidelines for mutual funds will be made applicable to ULIPs – and SEBI will monitor that portion. So the people will expect ZERO LOAD ulip plans, which the industry cannot provide.
6. Selling ulip is a very important activity for Hdfc, Icici, Kotak, SBI, Religare, Adag, …and the others. For all these entities (except SBI) raising money from the capital markets is CRITICAl and hence they will push SEBI to revoke the order. However to keep eogs intact some compromise formula will be worked out….asap
7. If nothing were to happen in the next 7 months, many foreign players will reconsider coming to India in the wealth management business. Which means bad news for people in the M&A business, so they will lobby…against the ban.
Of course how to react depends on where you sit…if you love mutual funds, you are saying ‘Of course, this had to happen’. If you are IRDA you are worried about territory, if you are Pranab Mukherjee you are wondering why the kids are squabbling in public. If you are a policy holder you are wondering should you surrender the policy today or tomorrow…(have got 4 calls from ‘worried’ clients). If you are an employee you can go on a vacation), If you are an agent you need to look for a different profession….OH My Gawd!
…as and when I can think of more …will keep you abreast ..till then have fun!!
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