As per the Bill, the RBI governor would be the vice-chairman of the committee instead of his being a member similar in status to the the other three regulators in the committee namelySebi, Irda and PFRDA.
The Securities and Insurance Laws (Amendment and Validation) Bill, 2010 also makes it clear that the financial regulators with statutory status can refer any disputes only to the joint committee and not to the central government as was earlier suggested in the ordinance.
It has also been clarified that only the four regulators RBI governor and the chairmen of Sebi, Irda and PFRDA -can make a reference to the joint committee in case of any difference of opinion between the regulators. The secretary-department of economic affairs would also be a member of the committee headed by the finance minister.
The joint mechanism is for resolving future differences of opinion as to whether any other investment or securities market instrument or a component of money market instrument falls within the jurisdiction of the Irda or Sebi or RBI or PFRDA, the FM said.
According to the ordinance issued earlier, RBI governor was an ex-officio member, like the other members of the panel. This would have been a big climb down for the central bank which had both under law and by conventionalways enjoyed a standing higher than that of any other regulator.
The heads of Irda, Sebi, the Pension Fund Regulatory and Development Authority and secretary of department of economic affairs at finance ministry from the rest of the body.
The new Bill that will replace the ordinance issued a month back says that the decision of the joint committee shall be binding on RBI, Sebi, Irda and PFRDA. Various financial sector regulators have expressed their displeasure over the Bill which was necessitated by the recent turf war between Irda and Sebi over regulation of the unit linked insurance policies. The Bill clarifies that life insurance business also includes Ulips and proposes to amend the Irda and Sebi Acts for that purpose.
The capital market regulator had issued an order against 14 insurance companies on April 9 by virtue of powers conferred upon it under section 19 of the Sebi Act 1992 directing them to stop selling the Ulips till they obtain requisite certificate of registration from Sebi. On the very next day Irda issued a circular saying that the insurance companies can carry on with sale of Ulips as the Insurance Act of 1938 leaves the regulatory jurisdiction of insurance products with Irda.
The Bill amends the Insurance Act, 1938, the Securities Contract (Regulation) Act 1956, and SBI Act, 1992, to clarify that Ulips will be a part of the life insurance business.