"We will see if the government has a role or we should let the legal process carry forward," Finance Secretary Ashok Chawla told the business newspaper.
On Friday, the Securities and Exchange Board of India barred 14 insurance companies from selling unit-linked insurance products without its approval, saying they needed to register with the capital markets regulator.
A day later the head of Insurance Regulatory and Development Authority (IRDA), which oversees insurance companies, said the insurers including Aviva Life Insurance Company, Bajaj Allianz Life Insurance, HDFC Standard Life Insurance and ICICI Prudential Life Insurance can continue selling the product.
"The recent developments have been unfortunate," J. Hari Narayan, chief of IRDA, told the paper.
"We are clear that the remit over regulation of Ulips rests with IRDA as the law stands now. Investors can go ahead and buy new Ulips or renew Ulips sold by these 14 companies and all other insurers," he said.
Officials at the insurance and market regulatory authorities could not immediately be reached for comment.