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Govt to implement large number of FSLRC proposals: FM Arun Jaitley

The Government will soon implement a large number of legislative and administrative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC), which had suggested a major overhauling of financial sector regulations.

‘As the change in process of reform continues ... I have not the least doubt that a large number of these (FSLRC) recommendations will actually see implementation in the days to come,’ Finance Minister Arun Jaitley said at a seminar organised by The ICSI.

The FSLRC, chaired by Justice B N Srikrishna, has suggested a non-sectoral, principle-based
approach to revamp the existing framework of financial and capital market regulation.

Among various suggestions, the FSLRC has suggested creation of a unified financial sector regulator comprising the Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), FMC and part of RBI.

Jaitley said that four different groups are studying the report and the implementation of the suggestions would require legislative as well as administrative changes.

FSLRC, which submitted its report to the government in March last year, has also given a draft legislation for putting in place an Indian Financial Code (IFC). Various stakeholders, including RBI, are opposed to certain proposals under the IFC.

Jaitley said, ‘Some legislative changes will also be required. I think with a combination of these administrative and legislative changes, the professional regulatory mechanism will come to stay.’ The country, Jaitley said, has moved away from a state-regulated mechanism to a mechanism where the market is trusted and there are professional regulators to deal with issues in sectors concerned.

‘We need to learn, not only from the best practices in India, but from the best global practices. And the Commission’s report is an extremely important step in that direction. Under the present circumstances, there are lots of changes which are required,’ he said.

The FSLRC proposals are divided into legislative and non-legislative aspects. It has recommended
a seven-agency structure for the financial sector — the Reserve Bank of India (RBI), Unified Financial Agency (UFA), Financial Sector Appellate Tribunal (FSAT), Resolution Corporation (RC), Financial Redressal Agency (FRA), Financial Stability and Development Council (FSDC) and
Public Debt Management Agency (PDMA). 
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