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NEW DELHI (Reuters) - The Securities and Exchange Board of India (SEBI) has barred 14 life insurance companies in India from issuing unit-linked insurance products (ULIPs) with immediate effect, according to a notice posted on its website.
Such products, which work in a similar way as mutual funds, should not be launched nor should money be raised from investors by way of new or additional subscription, till companies obtain the certificate of registration from SEBI, it said in its order on Friday.
"ULIPs offered by the said entities are a combination of investment and insurance and, therefore, the investment components are in the nature of mutual funds which can only be offered/launched after obtaining registration from SEBI …," the order said.
The regulator had issued notices to these firms in January and December seeking explanation as to why ULIPs were launched without its approval and why appropriate action should not be taken against them.
Such products, introduced in 2001, have been favoured by investors in the last few years because of the market linked returns they offer.