Avoid a U-turn, FSLRC goal achievable without truncating RBI



  • Super-regulator for financial sector mooted

    B N Srikrishna commission spares RBI for now


    A government-appointed panel on Friday proposed a unified regulator for markets, insurance, commodities and pensions. It proposed to keep banking out of its purview, but only temporarily.

    The panel, whose proposals could change the financial landscape of India, also suggested five additional agencies, including an appellate tribunal that would subsume the Securities Appellate Tribunal (SAT).

    The suggestions were made by the Financial Sector Legislative Reforms Commission, formed in March 2011 to rewrite and harmonise financial sector laws. The panel on Friday gave its report to Finance Minister P Chidambaram, who said the report would be made public in three to four days, after he discussed it with Prime Minister Manmohan Singh.

    The commission,  headed by retired Supreme Court judge B N Srikrishna, said RBI was there for monetary policy and enforcing laws in the banking sector. This system should be retained, it said, but only for now.

    When the unified regulator, to be called the Unified Financial Agency (UFA), got some experience, the panel said, RBI should be merged with it. The panel suggested that the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and Development Authority (Irda), the Pension Fund Regulatory and Development Authority (PFRDA) and the Forward Markets Commission (FMC) be subsumed under UFA.

    It suggested doing away with a multiple-agency structure for foreign capital inflows. Foreign direct investment (FDI) policy is now framed by the Department of Industrial Policy and Promotion. But the proposals are cleared by the Foreign Investment Promotion Board, after clearances from other agencies.

    The final report is also likely to suggest a sunset clause of 10 years for financial sector laws. Though the proposal was not part of the approach paper released in October 2012, the commission had indicated some legislations were obsolete and irrelevant in the current context.

    The approach paper had proposed moving from eight financial regulatory agencies to seven, to achieve economies of scope and scale.

    Besides UFA, RBI and the appellate tribunal, the four agencies proposed are: The Resolution Corporation to watch financial firms that have made intense promises to households and intervene when the net worth of such firms nears zero; the Financial Redressal Agency to address consumer complaints against financial sector companies; an Independent Debt Management Office, and the Financial Stability and Development Council, both with statutory powers.

    The Securities Appellate Tribunal (SAT) might be subsumed under the Financial Sector Appellate Tribunal, to hear appeals against RBI on regulatory functions, the Unified Financial Agency, decisions of the Financial Redressal Agency and some elements of the work of the Resolution Corporation.

    “Most of the recommendations are in line with the approach paper. But there are certain issues on which we have now more inputs. So, they have been modified,” said Srikrishna.

    The approach paper had also said there was a need for separating the adjudication function from the mainstream activities of a regulator, to achieve greater separation of powers. It had stressed independence of regulators, as the government has the power to issue directions to regulators.

    The commission proposed this power be removed. It was in favour of temporary capital controls based on economic conditions, rather than opting for permanent decontrol.

    In his Budget speech 2013-14, Chidambaram had said the Centre would act “quickly and decisively” on the recommendations of the commission. He also proposed constituting a standing council of experts to analyse the international competitiveness of the financial sector, periodically examine the transaction costs of doing business in the Indian market, and to provide inputs to government for action.
    COMMENTS
    M G WARRIER
    Even before the full report is available, it seems appropriate to comment on the following report: “When the unified regulator, to be called the Unified Financial Agency (UFA), got some experience, the panel said, RBI should be merged with it. The panel suggested that the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and Development Authority (Irda), the Pension Fund Regulatory and Development Authority (PFRDA) and the Forward Markets Commission (FMC) be subsumed under UFA.” Comment: If the media has not got it wrong, the idea of creating a Unified Financial Agency for all financial regulators except RBI, truncating RBI by separating Public debt Management and keeping the agency doing that work(presumably with the same work force) in RBI premises, later UFA subsuming even RBI all give a feeling that the FSLRC had many masters to serve and in the eagerness to satisfy all, it has forgotten its own brief. Perhaps the purpose would be served better, if RBI is allowed to function with its present mandates, a coordination committee sorts out issues among the remaining regulators and if GOI aim is to reduce the number of regulators, merge with RBI, the agencies outside RBI one by one as work stabilizes. The goal of one Unified Financia Agency would be better achieved this way.
    23-03-2013 18:11:13 | Reply

    Comments

    Post a Comment

    Popular posts from this blog

    NAVAGRAHA STOTRAM

    NAVAGRAHA STOTRAM* According to astrology, the positions of the nine planets in the twelve constellations of the zodiac and their movements are considered to be quite significant. The nine planets ‘Navagraha’ affect every aspect of human life. They play an important role in the activities, physical and mental health and life of any individual. The unfavorable positioning of any of these planets can be the cause of problems, bad health, and stagnation for many people. However, there is a solution to avoid the ill effects of the position and movement of the ‘Navagraha’ in our lives. Navagraha mantras (or stotram) are simple mantras which work as powerful healing tools to reduce the negative effects of any of the nine planets. These mantras are Hindu holy hymn addressing the nine planets. Benefits Of Navagraha Stotram And The Way to Practice The Navagraha Stotram is written b y Rishi Vyasa and is considered to be the peace mantra for the nine planets. They are powerful m
    Read more

    THE SUNSET OF THE CENTURY

    *SUNSET OF THE CENTURY: Rabindranath Tagore THE LAST SUN OF THE CENTURY SETS AMIDST THE BLOOD-RED COLOURS OF THE WEST AND THE WHIRLWIND OF HATRED. THE NAKED PASSION OF SELF-LOVE OF NATIONS IN ITS DRUNKEN DELIRIUM OF GREED IS DANCING TO THE CLASH OF STEEL AND THE HOWLING VERSES OF VENGEANCE. THE HUNGRY SELF OF THE NATION SHALL BURST IN A VIOLENCE OF FURY FROM ITS OWNSHAMELESS FEEDING FOR IT HAS MADE THE WORLDITS FOOD, AND LICKING IT, CRUNCHING IT AND SWALLOWING IT IN BIG MORSELS, IT SWELLS AND SWELLS TILL IN THE MIDST OF ITS UNHOLY FEAST DESCENDS THE SUDDEN HEAVEN PIERCING ITS HEART OF GROSSNESS…   *Note: “The Sunset of the Century”, translated by the poet, from Naivedya; The English Writings of   Rabindranathtagore, Volume II,Delhi 1996, page 466. Quoted in his article ‘Critiquing nationalism’ by K Satchidanandan (Frontline, November 14, 2014). The article takes you to a much broader spectrum. HAPPY READING(READ MORE STAN
    Read more

    The King of Ragas: Sankarabharanam

                           The King of Ragas                      --------------------------     Long ago  serpents were put to lot of hardships.They  were afraid of other animals. They had to seek refuge in the hermitage of sage Saraba.The sage was a true devotee of Lord Shiva.He used to pray Shiva with melodious songs. As he sang a particular raga the snakes were much inspired and they began to dance,. Slowly the serpents became friendly with the sage. They brought water in their mouths for the pooja.They secreted  a special fluid in which the flowers got stuck to their bodies.The sage was much astonished by the service of the snakes.As the sarpas became very close to the sage ,they requested him to help having Darsan of Lord Siva. As requested by the sage Shiva appeared in the form of  a  Kapalika and stayed in the ashram.The music and dance of the snakes continued. The snakes rendered service to the kapalika as they considered him  a Shiva bhakta.Shiva was much pleased with t
    Read more