India's Insurance regulator is once at loggerheads again with the country's capital market regulator SEBI.

The Insurance Regulatory & Development Authority (IRDA) has objected to SEBI's proposal to allow insurance firms to become proprietary trading members for the recently approved debt trading on stock exchanges.

Last month, SEBI allowed stock exchanges to establish debt segments to boost the country's tormented corporate bond market. The capital market regulator also proposed that financial institutions like insurance companies and pension funds be allowed to become proprietary trading members of the stock exchanges and also to trade in their own account.

The capital market regulator's proposal aims to boost liquidity, but the insurance regulator has argued that it would not be prudent for insurance firms to perform proprietary transactions with policyholders' hard-earned money.

Meanwhile, a senior official with has suggested that if IRDA wary of any such move then it can prescribe internal curbs.

Speaking on the condition of anonymity, the official said, "The debt segment will, in fact, help mitigate risk. If Irda is apprehensive about allowing insurers, it can prescribe internal curbs, such as a cap on exposure or net worth."

This is not the first time when the two regulators are at loggerheads. Earlier in 2010, they had been at odds over the regulatory jurisdiction of unit-linked insurance products (ULIPs).