Modified draft Indian Financial Code likely by mid-2015

Taking forward financial sector reforms agenda, Finance Ministry expects to be ready with the modified draft law for implementation of FSLRC recommendations by mid-2015 after extensive stakeholder consultations. The Financial Sector Legislative Reforms Commission, chaired by Justice B N Srikrishna, has suggested a non-sectoral, principle-based approach to revamp the existing framework.FSLRC, which submitted its report to the government in March last year, has also given a draft legislation Indian Financial Code. Various stakeholders, including regulators, are opposed to certain proposals under the IFC.According to a senior Finance Ministry official, the draft IFC would be modified as some quarters are not in agreement with certain legislative aspects. "We will modify draft of IFC... In best case scenario, modified draft law (IFC) should be ready by middle of next year after consultations," the official told PTI. Once the modified draft law is ready, it would be put up to the Finance Minister, the official added.At present, the government is working on implementing certain proposals that do not require changes in laws.The recommendations of the FSLRC 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).Earlier this month, Minister of State for Finance Nirmala Sitharaman informed the Lok Sabha that implementation of legislative recommendations in the IFC would require wider consultations with stakeholders.The legislative recommendations relate to re-writing the laws using a principle based approach, restructuring existing regulatory agencies and creating new agencies, the Minister had said.Meanwhile, the non-legislative aspects pertain to measures on enhancing consumer protection and greater transparency in the functioning of financial sector regulators.