Ulips : Irda wins turf battle with sebi

In what was being seen as a turf battle between sebi and irda, the winner as of now seems to be Irda. It shows the power of the people in the life Insurance business.

Now if you have LIC, SBI, Hdfc, Icici, …each with a few ‘000 crores of stake in the insurance business and Mr Bhave on the other side, who thought that Mr. Bhave could win? Well I am not sure.

The media went to town saying ULIPs are bad, so many life insurance companies changed the name of the product to ‘Endowment Fantastic ‘ or something which dropped the unit linked. Simple.

Not sure about whether the amount raised by ULIP is 10, 100 or 300 times the amount raised from the RETAIL investor in mutual funds since the entry load was banned.

FRankly it does not matter what cnbc, ET tv, UTV bloomberg, or the other print media say, if a product is sold, it will sell. Afterall McDonalds, Coke, Pepsi and Lays can spread diabetes and ITC can spread cancer without any problems, can they not?

The government requires millions of rupees for divesting (by the way if we the people are the owners of the public sector, does it matter at what price the IPOs are given to us?) and this can come from LIC. Imagine the LIC chairman calling the FM and saying…’Maalik…Power Grid ka issue ke liye paisa nahi hain…ULIP is not collecting money..”. The FM had to bring this ordnance.

See the Direct Tax code. Only pension plans of the government are allowed a deduction under 80 C (or its equivalent)…OMG the govt’s greed sucks.

Sebi has many good things like cap on expenses, trustees, custodian, r&t agents registration, etc. It is time IRDA accepted that they do not know how to regulate ULIPs and does a ‘cut and paste’ of the Sebi rules and regulations for it s ULIPs. Limit on how much can be invested in one group, in one industry, the advertising norms, who can be a broker, broker’s registration, etc – many rules  should be as much applicable to the Ulips, so I hope the investors benefit…sebi or no sebi.

Reminds me of Rajagopalachari’s (Rajaji’s) statement when the PSUs were started …”Raja bane vyapari, praja bane bhikari”.

When the IRDA was formed, the rules were favoring LIC….now the government is favoring the money bags of the insurance companies.

Over to you Mr. Bhave, will you bring back the loads in the mutual funds?

L O L.

PS:  ‘we are committed to protect the small investor’ …ROFL, LOL, ROFFFLLLL 🙂 🙂

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3 Responses to “Ulips : Irda wins turf battle with sebi”

  1. good post. very interesting!

  2. Good take on the fight! Afterall if LIC and the other players have found a way to pick the pockets of the middle class (other than tax) why would they government stop it? Will the load come back in mutual funds – or are you saying that LIC, hdfc, icici, sbi, not bother about their mf arms if they are making so much money in the insurance arm. would be interesting to know the mf(retail): unit linked plan ratio. I think it would be in the ratio of 1: 50 at least :).

  3. Does God exist? Difficult to argue against God…just in case he exists! Similarly some websites who perhaps thought that SEBI will be told how to regulate ULIP and went hammer and tongs at it find that their goose is cooked or well being cooked. They are seeing this as a ‘Ulip vs. mf’. Again here they are ignorin the fact that if a person has invested in mutual funds for say 30 years he will be ripped apart by the charges. Worse is an investor who kept jumping from one scheme to the other. I agree with Subra who had once said ‘If a woman wants to be safe…she shoud learn Karate’. Financial education is the only solution – do not get carried away by websites which are dependant on mutual fund ads!!!

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