What has caught my imagination this time is perhaps not the most contentious of issues today, but nevertheless , worth some mention here. The news about the newly found truce between the IRDA and SEBI is already making rounds. This very battle reminds me of the two year old ownership mess between the Ambani brothers. Earlier the structure of this financial hierarchy was somewhat elusive of my understanding , but having given it a random thought , I think I can get to the bottom of it.
SEBI, the sole regulator of all equity transactions in the market, is the more dominant of bodies as compared to the IRDA. Here comes the analogy. SEBI can be projected to be the legitimate son of NSE, the parent regulator. Having a decent , if not complete authority over transactions , SEBI has long been ostensible about its power and influence. IRDA on the other hand, metaphorises itself to be the ignored Illegitimate Son. Now, the argument arises over the word "illegitimate" . By my limited understanding I perceive an object to be illegitimate if its formation precedes the intention of it being used. IRDA was setup with a more obligatory set of powers, powers given to it for mere consolation . The board members of the IRDA had long realised this painful irony, and not only were they complacent to it but also somewhere satisfied with the perks they were granted for doing absolutely nothing .More directly, it turned out to be a dream job for some. For the more intellectual variety at IRDA , this was blasphemy. The ignominy they had to face in front of their counterparts in the SEBI would squeal them for inside , hitting their semipermeable wall of ego with little pebbles. As time passed , the rotundity of these erstwhile minute pebbles kept increasing gradually. What could not be averted was this ego being thwarted one day, making them clamor for their respect. It was coincidence then that a new financial product was about to hit the Indian circuit. The name ,ULIPS, very much synonymous to "tulips" , initially, did not go very well with investors. However given its torrid promotion, it somehow filled hand in glove with the then emerging needs, the need to hedge, that is to add to the portfolio an element of prudence, which was sufficed by that 2-5 % share of insurance. It can be blamed on the financial illiteracy of the then naive Indian investor, who invested his life earnings in this novelty , that the real picture remained rather hidden. As it appears now, people were fooled upfront , how ? that's a different story all together.
How does the IRDA come into picture? The IRDA needs some applaud for capitalizing on that minute 2-5% share of insurance to bring ULIPS within its purview of regulation. SEBI , inebriated by its power , failed to gauge the audacity of the situation, and of the fact that it had lost the opportunity to regulate a product which, by far, needed more regulation than others. And thereby followed the mess we have today. As the matter gets set to be settled in court , the common man is caught unaware of his financial unawareness and projects himself to be a member of a breed of Indians , who have very recently managed to accumulate a decent amount of wealth, the newly rich as they are called, participating in India's growth story but have failed to pocket that financial and intellectual insight that could help them retain this wealth in the future.
SEBI, the sole regulator of all equity transactions in the market, is the more dominant of bodies as compared to the IRDA. Here comes the analogy. SEBI can be projected to be the legitimate son of NSE, the parent regulator. Having a decent , if not complete authority over transactions , SEBI has long been ostensible about its power and influence. IRDA on the other hand, metaphorises itself to be the ignored Illegitimate Son. Now, the argument arises over the word "illegitimate" . By my limited understanding I perceive an object to be illegitimate if its formation precedes the intention of it being used. IRDA was setup with a more obligatory set of powers, powers given to it for mere consolation . The board members of the IRDA had long realised this painful irony, and not only were they complacent to it but also somewhere satisfied with the perks they were granted for doing absolutely nothing .More directly, it turned out to be a dream job for some. For the more intellectual variety at IRDA , this was blasphemy. The ignominy they had to face in front of their counterparts in the SEBI would squeal them for inside , hitting their semipermeable wall of ego with little pebbles. As time passed , the rotundity of these erstwhile minute pebbles kept increasing gradually. What could not be averted was this ego being thwarted one day, making them clamor for their respect. It was coincidence then that a new financial product was about to hit the Indian circuit. The name ,ULIPS, very much synonymous to "tulips" , initially, did not go very well with investors. However given its torrid promotion, it somehow filled hand in glove with the then emerging needs, the need to hedge, that is to add to the portfolio an element of prudence, which was sufficed by that 2-5 % share of insurance. It can be blamed on the financial illiteracy of the then naive Indian investor, who invested his life earnings in this novelty , that the real picture remained rather hidden. As it appears now, people were fooled upfront , how ? that's a different story all together.
How does the IRDA come into picture? The IRDA needs some applaud for capitalizing on that minute 2-5% share of insurance to bring ULIPS within its purview of regulation. SEBI , inebriated by its power , failed to gauge the audacity of the situation, and of the fact that it had lost the opportunity to regulate a product which, by far, needed more regulation than others. And thereby followed the mess we have today. As the matter gets set to be settled in court , the common man is caught unaware of his financial unawareness and projects himself to be a member of a breed of Indians , who have very recently managed to accumulate a decent amount of wealth, the newly rich as they are called, participating in India's growth story but have failed to pocket that financial and intellectual insight that could help them retain this wealth in the future.
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