Subbarao meets FM over Ulip ordinance

At a meeting with Finance Minister Pranab Mukherjee here, Subbarao raised issues concerning the role of the central bank in the light of the Ordinance.

“I have come to meet the finance minister in connection with the ordinance that they have issued regarding settlement of dispute on regulatory jurisdiction. RBI has certain reservations and concerns, which we have expressed in the letter,” he told reporters after the meeting.

Fearing that the ordinance would dilute the central bank’s role as financial sector coordinator, the RBI has reportedly requested the finance ministry to let the Ordinance lapse and not covert it into a law.

“He (Mukherjee) will take a final view because passing the law is a prerogative of the government,” Subbarao added.

The government last month ended a two-month long turf war between insurance regulator Irda and capital market watchdog Sebi through an ordinance that made it clear that the Ulips would be regulated by Irda.

The ordinance also sought to create a high-level panel, chaired by Finance Minister Pranab Mukherjee, that will sort out all issues of jurisdiction regarding hybrid products. Ordinances are in the nature of law and are promulgated by the President when Parliament is not in session.