The Justice Srikrishna headed Financial Sector Legislative Reforms Commission (FSLRC) today submitted its report to finance minister P Chidambaram. The report proposes a complete overhaul of the existing financial sector laws and suggests a new omnibus law – the Indian financial code – to oversee the entire gamut of financial sector issues. The report also calls for the setting up off a new financial redressal agency among others things. CNBC-TV18’s Siddharth Zarabi reports.
It proposes to subsume, repeal and basically incorporate every existing law that deals with the financial sector. These laws include principal and main legislations like the Securities and Exchange Board of India Act (Sebi Act), the Reserve Bank of India Act (RBI Act). In some ways, the RBI Act is separate, but all other laws essentially 20 laws would get repealed. There would be perhaps amendments in many other laws.
The FSLRC went through as many as 62 laws and did an exhaustive study of them with regards to coming up with this new regulatory architecture. The law is one primary element of this report.
The second element is: what do you do with the multiple architecture or multiple regulatory setups that India has for the moment. As far as the banking regulator is concerned, in terms of payment distribution and the oversight and supervision, the FSLRC has not suggested any sort of tinkering. The RBI will continue to be the monetary as well as the banking authority in our country. That is not going to change.
What will change? India has multiple regulators across sectors. The report suggests that there are so many overlaps and common elements in all these regulators but the objectives of those regulatory bodies are not clear.
Therefore, consumer protection via the creation of a financial redressal agency is one of the other key recommendations in this report and because of that the streamlining of the objectives of say the Sebi or for that matter the Pension Fund Regulatory and Development Authority (PFRDA) all have been proposed in this report.
Those are the key highlights. There are several other elements but the key thing is a new financial law, a financial redressal agency, the banking bit, the monetary bit to remain as it is and the finance ministry in some ways will now have to go through the fine print.