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CS Executive · Setting Up of Business, Industrial and Labour Laws · Financial Services Organization

A hybrid product combines a life insurance policy under the Insurance Act, 1938 with a securities market component. IRDAI and SEBI disagree on whose jurisdiction it falls under. Which statement matches section 45Y of the RBI Act, 1934?

The difference goes to a Joint Committee chaired by the Union Finance Minister, and its decision binds RBI, SEBI, IRDAI and PFRDA. Section 45Y provides this for hybrid or composite instruments, so no single regulator's view prevails automatically.

  1. AIRDAI's view prevails because the product includes a life insurance policy
  2. BThe difference is referred to a Joint Committee chaired by the Union Finance Minister, and its decision binds the regulatorsCorrect
  3. CThe Supreme Court must decide the matter within three months
  4. DThe Governor, RBI alone decides, and the other regulators may appeal

Explanation

Section 45Y sends such differences to a Joint Committee with the Union Finance Minister as ex officio Chairperson. A reference may be made by the RBI Governor or the heads of IRDAI, SEBI or PFRDA, the decision is due within three months, and it binds RBI, SEBI, IRDAI and PFRDA. No regulator's view automatically prevails.

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