The Centre will implement a ‘large number’ of legislative reforms recommended by the Financial Sector Legislative Reforms Commission (FSLRC) ‘in the days to come’, Finance Minister Arun Jaitley said here on Saturday.
Mr. Jaitley said a combination of legislative and administrative changes would be required for strengthening the regulatory framework in the financial sector. Four different groups had been set up to examine every aspect of the legislative changes recommended by the Commission.
“As the progress of reforms continues, I have not the least doubt that a large number of FSLRC recommendations will actually see implementation in the days to come,” said Mr. Jaitley at a seminar on ‘Indian Financial Code’, organised by the Institute of Company Secretaries of India and the BSE .
The Commission, chaired by Justice B. N. Srikrishna, which submitted its report on March 22, 2013, suggested drastic changes to the financial sector’s regulatory architecture. These include putting in place an Indian Financial Code that will replace the bulk of existing laws and creating a single regulator for pension, equity, insurance and commodities markets. It has also proposed to retain the Reserve Bank, but recommended to review its regulatory structure.
The Finance Minister said the country had moved away from State-regulated mechanism to a mechanism where the market was trusted and where there were professional regulators to deal with issues in sectors concerned.
“We need to institutionalise the mechanism. We need the best practices in India... the best global practices. The Commission’s report is an extremely important step in developing that framework,” said Mr. Jaitley, adding, “Somebody has to keep an eye on the markets... watch consumers interest and prevent aberrations.”
Mr. Jaitley said, “we trusted the government than the market…..and distribution of poverty got importance than the creation of wealth.” He added, “the State cannot not be the player and the decision maker or referee.”
Mr. Justice (Retd) Srikrishna, who spoke at the seminar, said that “many regulators are not doing enough for the consumer.” According to him, “financial sector providers should make clear and adequate disclosures…..regulator should be more effective and responsible to the Parliament and people at large.”
PTI adds
Hitting back at RBI Governor Raghuram Rajan for his views on the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC), Commission Chairman B. N. Srikrishna on Saturday said Dr. Rajan was once in favour of an appellate tribunal, but changed his stance after moving to the central bank.
“In his 2009 report ‘A 100 Steps’, Dr. Rajan wrote ‘regulatory action should be subject to appeal to the financial sector appellate tribunals’,”
Mr. Justice (Retd) Srikrishna said while adding this report was a guiding light for the Commission.
The FSLRC had suggested a non-sectoral, principle-based approach to revamp the existing framework. Among various suggestions, the FSLRC has recommended setting up a unified Financial Sector Appellate Tribunal (FSAT) that would hear all appeals against financial sector regulators.
It had also suggested creation of a unified financial sector regulator comprising SEBI, IRDA, FMC and part of RBI.
Dr. Rajan had earlier criticised FSLRC recommendations as ‘somewhat schizophrenic’.
