'Any decision on common financial regulator only after FSLRC report'
New Delhi: The government on Thursday said it would examine the possibility of setting up a common regulator for the financial sector after receiving the report of Justice B N Srikrishna-headed Financial Sector Legislative Reforms Commission (FSLRC).
"The Commission headed by B N Srikrishna would examine financial sector legislation, including subordinate legislations... The Government would examine the recommendations of the commission, after the submission of report," Minister of State for Finance Namo Narain Meena said in a written reply to the Rajya Sabha.
He further said, the term of reference of Commission include, inter-alia, examining the architecture of the legislative and regulatory system governing the financial sector in India.
Recently, the Commission in an approach paper had proposed a unified regulator for financial sector laws, including those for markets, insurance, commodities and pension.
It, however, had proposed to keep banking out of the regulator's purview and had also suggested setting up of a financial redressal agency (FRA) to address consumer complaints against companies across the financial sector.
The Approach Paper, on which the Commission will seek comments from stakeholders, had underlined the need for establishing an independent debt management office (DMO) and a financial sector appellate tribunal to hear appeals against regulators.
"These changes will alter the Indian financial landscape from eight financial regulatory agencies to seven," the Paper had said. The paper will form the basis of the report of the Commission, which was set up in March 2011 to re-write the legislations affecting the financial markets in the country.
Under the existing architecture, the financial sector is regulated by eight agencies including Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA) and Forward Markets Commission (FMC).
As per the proposal, there would be five new agencies besides Reserve Bank and FSDC. The new ones would be UFA, Financial Sector Appellate Tribunal (FSAT), Financial Redressal Agency (FRA), Debt Management Office (DMO) and Resolution Corporation.
At present, while the stock market is regulated by Sebi, the activities in the commodities market are looked after by FMC. The insurance sector is regulated by the IRDA, while the PFRDA is responsible for managing the pension sector.
The Unified Financial Agency (UFA), the approach paper had said, would deal with all financial firms other than banking and payments. It would also yield benefits in terms of economies of scale in the financial system.