The Securities and Exchange Board of India, which was party to the truce brokered by the finance ministry on Monday under which status quo ante as of April 9 would be maintained, on Tuesday came out with a new order that new Ulip schemes and products would be governed by its Friday order.
"This is to bring to the notice of the investors that Sebi has decided to keep in abeyance, till further notice, the enforcement of the April 9 directions with respect to the Ulip schemes/products existing on the date of the order April 9, 2010.
"However, with respect to any new Ulip schemes/products launched after 09.04.10, the directions mentioned in the said order will be enforced as indicated therein," market regulator said in its order.
The Sebi said that Tuesday's directions have been communicated to 14 insurance companies that have been restrained from issuing any Ulip offer till they obtain permission from it.
Within 24 hours of the Friday order, the Insurance Regulatory and Development Authority had asked the companies to ignore Sebi's order and continue with business as usual, forcing the government to intervene.
Attempts to reach chairman of Insurance Regulatory Development Authority J Harinarayan for his reaction were not successful.
Reacting sharply to Sebi's fresh order, the Life Insurance Council (the apex body of life insurance companies) said it would definitely affect companies that had started business last year or two years ago in a year or two.
"They were not able to sell many products. They have been unfairly affected by this order. There will not be level playing field for those companies who have just started business and the older ones," S B Mathur, secretary general of the council, said.
Asked whether they plan to move the court, he said it all depends on whether the latest order is as per the understanding between regulators -- Sebi and Irda.
"If it is as per their understanding, then there is no point in dragging the matter to the court," he added.
Finance Minister Pranab Mukherjee, who had on Monday announced that status quo ante was being restored and that the two regulators have agreed to jointly seek a binding legal mandate from an appropriate court, on Tuesday said he would have to go through the Sebi's fresh order before he could react.
Meanwhile, a PIL has been filed in the Bombay high court seeking reversal of Sebi's ban on sale of Ulips by insurance companies on the ground that lakhs of investors were suffering from anxiety and uncertainty about their investments due to the order.
About 7.03 crore (70.3 million) Ulip policies involving a total premium of Rs 90,645 crore (Rs 906.45 billion) were in force in 2008-09. As many as 16.7 lakh (1.617 million) policies were sold with a premium of Rs 44,611 crore (Rs 446.11 billion) during April-February 2009-10.
The companies that the Sebi order banned from raising fresh money through Ulips were SBI Life, ICICI Prudential, Tata AIG, Aegon Religare Life, Aviva Life, Bajaj Allianz, Bharti AXA, Birla Sunlife, HDFC Standard Life, ING Vysya Life, Kotak Mahindra Old Mutual Life, Max New York Life, Metlife India and Reliance Life.