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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework of Banks

A product offered by a financial group combines a money market component with a life insurance component. RBI and IRDAI disagree on which of them has jurisdiction over it. Under the Joint Mechanism in section 45Y of the RBI Act, 1934, where is the difference of opinion to be referred?

The difference must be referred to the Joint Committee under section 45Y of the RBI Act, 1934. Its ex officio Chairperson is the Union Finance Minister. The Act provides this committee, not a tribunal or court, to settle jurisdiction over hybrid or composite instruments.

  1. ATo the Joint Committee chaired ex officio by the Union Finance MinisterCorrect
  2. BTo the Securities Appellate Tribunal
  3. CTo the Board of the Reserve Bank of India
  4. DTo the Supreme Court of India directly

Explanation

Section 45Y(1) says that a difference of opinion on whether an instrument is a hybrid or composite instrument falling within the jurisdiction of RBI, SEBI, IRDAI or PFRDA is referred to a Joint Committee. The Union Finance Minister is its ex officio Chairperson. The other options are not the forum provided.

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