Financial data management body mooted

A committee set up under the Department of Economic Affairs has recommended the creation of a statutory body that will standardise data from all financial sector regulators in a single database and provide analytical insights based on the data.

The report of the committee to study the financial data management legal framework in India, made public on Thursday, suggests the passage of a Bill in Parliament — the Financial Data Management Centre Bill 2016 — to create the statutory body, as recommended by Finance Minister Arun Jaitley.

“Subject to the provisions of this Act, or any other law for the time being in force, it shall be the duty of the Data Centre to take measures to standardise data from regulators in consultation with the regulators, enable financial service providers to submit data in a standardised electronic format, analyse the data and maintain a financial system database,” according to the proposed Act.

The powers of the Financial Data Management Centre (FDMC) will include the establishment, operation and maintenance of the financial system database along with collecting financial regulatory data and providing access to it. The body will also provide analytical support to the Financial Stability and Development Council (FSDC) on issues relating to financial stability.

In 2015, when the FSDC first suggested the creation of such a body, the Reserve Bank had objected to sharing company-specific data with the body as it was not statutory in nature, and sharing such data would be a breach of confidentiality.

“In the absence of any statutory or other legal basis which empowers FDMC to compel furnishing of confidential information to it, disclosure of any such information by Reserve Bank may not be justified as it may not fall within the recognised exception of compulsion of law,” the banking regulator had said at the time.

Even the Department of Legal Affairs said that the “majority of the financial sector regulators being statutory in nature, it is not clear from the proposal how the non-statutory FDMC will collect data from such regulators.”

Keeping these concerns in mind, the Department of Economic Affairs re-examined the issue and obtained the Finance Minister’s approval to establish a statutory FDMC, following which a committee was formed to recommend the way forward.

In 2015, RBI had objected to the idea as sharing data with the body would be a confidentiality breach