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Panel moots unified financial regulator, RBI for all banks

Seeking to reform the financial sector regulations, the government-appointed FSLRC has proposed Indian Financial Code Bill to pave way for creation of a unified financial regulator and limit the role of Reserve Bank to monetary management. Under the proposed regulatory architecture, Securities and Exchange Board of India (Sebi), Forward Markets Commission (FMC), Insurance Regulatory and Development Authority (IRDA) and Pension Fund Regulatory and Development Authority (PFRDA) would be merged into a new unified agency.  The Reserve Bank of India, however, will continue to exist with modified functions, said the two-volume report of the Justice B N Srikrishna headed Financial Sector Legislative Reforms Commission (FSLRC). In order to give effect to its recommendations, the Commission has come out with a draft Indian Financial Code Bill, containing 450 clauses and six schedules.

The report, however, is marked by four dissenting notes by members P J Nayak, K J Udeshi, Y H Malegam and Jayanth R Varma. They have differed with the recommendations of the of the panel on different issues. The Commission, which had submitted its report to Finance Minister P Chidambaram last week, had 10 members besides chairman Srikrishna.  ‘The Commission is mindful that over the coming 25 to 30 years, Indian GDP is likely to become eight times larger than the present level, and is likely to be bigger than the United States GDP as of today...The aspiration of the Commission is to draft a body of law that will stand the test of time.’
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