Mumbai: The Birla Sun Life Mutual Fund has said that the Unit Linked Insurance Plans (ULIPs) are eating into the share of domestic mutual funds in the retail financial sector and mutual funds should be put on a level playing field with the insurance companies.
The CEO of Birla Sun Life Asset Management Company, Mukul Gupta said that while the regulator had stringent Know Your Client (KYC) norms for mutual funds, insurance companies enjoyed less stringent norms.
Citing a simple example on why he was arguing for more stringent rules for insurance companies, he said while it is mandatory for mutual funds to quote PAN for investments, this doesn’t apply to life insurance companies even for the similar products.
Such norms have put the mutual fund industry at a disadvantage particularly when the infrastructure was not as well knit as the insurance sector, he said.
“Companies in the insurance business have much larger infrastructure while the mutual fund industry is still very young, we are raising our infrastructure in B and C class cities,” he added.
ULIPs with their promise of market-linked returns combined with the dual benefit of insuring life from eventualities fulfilled investment needs of an investor along with protection or insurance needs of an insurance seeker.
Interestingly, fund houses did not seem to be having so much competition from their sister concerns as much as from insurance behemoth Life Insurance Corporation of India (LIC) and collectively from other fast growing private sector life insurance companies with much larger infrastructure.