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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 with a securities market component, and the RBI, SEBI and IRDAI differ on which of them has jurisdiction. Section 45Y of the RBI Act, 1934 provides for a Joint Committee. Which statement is correct?

The Union Finance Minister chairs the Joint Committee, the RBI Governor is Vice-Chairperson, and its decision binds the RBI, SEBI, IRDAI and PFRDA. Only the RBI Governor or the heads of IRDAI, SEBI or PFRDA can refer a dispute, and the decision is due within three months.

  1. AThe Union Finance Minister chairs it, the RBI Governor is Vice-Chairperson, and its decision binds the RBI, SEBI, IRDAI and PFRDACorrect
  2. BThe RBI Governor chairs it, and its decision is only advisory to the regulators
  3. CAny Member including the Finance Secretary may refer the matter, and it must decide within one year
  4. DThe IRDAI Chairperson chairs it, and the decision binds only the insurance regulator

Explanation

Section 45Y makes the Union Finance Minister ex officio Chairperson and the RBI Governor Vice-Chairperson. The decision is binding on the RBI, SEBI, IRDAI and PFRDA. Reference can be made only by the members in clauses (b), (e), (f) or (g), and the decision is due within three months, so the other options are wrong.

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