Jaitley keen to overhaul financial sector norms

Reforms Commission, chaired by Justice B N Srikrishna, has suggested a non-sectoral, principle-based approach to revamp the existing framework

The government will soon implement a large number of legislative and administrative recommendations of the Financial Sector 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 Jaitely said at a seminar organised by the ICSI.

The Financial Sector Legislative Reforms Commission (FSLRC), chaired by Justice B N Srikrishna, has suggested a non-sectoral, principle-based approach to revamp the existing framework. Among various suggestions, the FSLRC has suggested creation of a unified financial sector regulator comprising SEBI, IRDA, FMC and part of RBI.

Jaitely said 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 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 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).