24 January 2010

ULIPs are funds under SEBI

This blog has been advocating since June 2008 that ULIPs which are mutual fund products with a fig leaf of insurance, ought to be regulated by SEBI. This is notwithstanding the fact that the insurance regulator IRDA already regulates it. There is nothing unusual with more than one regulator regulating a product - e.g. Gold futures has three regulators SEBI, Reserve Bank and Forward Market Commission.

See my post of June 2008 where I discuss the malpractices in the wild west of insurance products.

Finally, SEBI has sent notices to the issuers of these products, presumably asking them why they should not register with SEBI (though not under the mutual fund regulation). In my opinion any product which invests over 10% of its funds in market securities must be registered with SEBI.

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