| Super- regulator for financial sectormooted |
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New Delhi, 22 March Agovernmentappointed panel today proposed a unified regulator for markets, insurance, commodities and pensions. It proposed to keep banking out of its purview, but only temporarily. The panel, whose proposals could change the financial landscape of India, also suggested five additional agencies, including an appellate tribunal that would subsume the Securities Appellate Tribunal ( SAT). The suggestions were made by the Financial Sector Legislative Reforms Commission, formed in March 2011 to rewrite and harmonise financial sector laws. The panel today gave its report to Finance Minister P Chidambaram, who said the report would be made public in three to four days, after he discussed it with Prime Minister Manmohan Singh. The commission, headed by retired Supreme Court judge BN Srikrishna, said RBI was there for monetary policy and enforcing laws in the banking sector. This system should be retained, it said, but only for now. When the unified regulator, to be called the Unified Financial Agency (UFA), got some experience, the panel said, RBI should be merged with it. The panel suggested that the Securities and Exchange Board of India ( Sebi), the Insurance Regulatory and Development Authority ( Irda), the Pension Fund Regulatory and Development Authority (PFRDA) and the Forward Markets Commission (FMC) be subsumed under UFA. It suggested doing away with a multipleagency structure for foreign capital inflows. Foreign direct investment (FDI) policy is now framed by the Department of Industrial Policy and Promotion. But the proposals are cleared by the Foreign Investment Promotion Board, after clearances from other agencies. The final report is also likely to suggest a sunset clause of 10 years for financial sector laws. Though the proposal was not part of the approach paper released in October 2012, the commission had indicated some legislations were obsolete and irrelevant in the current context. The approach paper had proposed moving from eight financial regulatory agencies to seven, to achieve economies of scope and scale. Besides UFA, RBI and the appellate tribunal, the four agencies proposed are: The Resolution Corporation to watch financial firms that have made intense promises to households and intervene when the net worth of such firms nears zero; the Financial Redressal Agency to address consumer complaints against financial sector companies; an Independent Debt Management Office, and the Financial Stability and Development Council, both with statutory powers. Turn to Page 4 > BN Srikrishna commission spares RBI for now REGULATORY OVERHAUL |Sebi, Irda, PFRDA, FMC to come under one regulator |RBI to be kept out until UFA gets enough experience |Multiple agency structure for capital inflows to go |Sunset clause to be prescribed for all financial laws |Regulators to be given more independence |FM to discuss report with PM and release it next week The architecture [1]Proposed [1] Present >Unified Financial Agency Sebi, FMC, Irda, PFRDA >Financial Sector Appellate Tribunal Securities Appellate Tribunal >Resolution Corporation, Financial Redressal Agency, Debt Management Office Deposit Insurance and Credit Guarantee Corporation Source: Financial Sector Legislative Reforms Commission's approach paper |
| Click here to read more...Turn to Page 4 > |
| Super- regulator for financial sectormooted |
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"Most of the recommendations are in line with the approach paper. But there are certain issues on which we have now more inputs. So, they have been modified," said Srikrishna. The approach paper had also said there was a need for separating the adjudication function from the mainstream activities of a regulator, to achieve greater separation of powers. It had stressed independence of regulators, as the government has the power to issue directions to regulators. The commission proposed this power be removed. It was in favour of temporary capital controls based on economic conditions, rather than opting for permanent decontrol. In his Budget speech 2013- 14, Chidambaram had said the Centre would act "quickly and decisively" on the recommendations of the commission. He also proposed constituting a standing council of experts to analyse the international competitiveness of the financial sector, periodically examine the transaction costs of doing business in the Indian market, and to provide inputs to government for action. >FROM PAGE 1 |
| ₹ 2k- cr sops likely for exporters in policy review |
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New Delhi, 22 March The government intends to give an incentive package worth ₹ 1,500- 2,000 crore as part of the annual review of the Foreign Trade Policy ( FTP) 2009- 2014. Exports are set to register a decline this financial year, compared to last year. Lower costs for credit, full rebate on duties and taxes and reduction in transaction costs are some of the top items in the government's agenda for the supplement to the FTP, to be announced in the first week of April. Exports have been in rough waters since the financial downturn in developed markets started in 2008. However, shipments from India were still able to register a positive yearonyear growth. This will be the first financial year since the recession when exports would see a fall compared to the previous year. "We are looking at the (export) numbers and what is very disturbing and challenging is that we have not even reached where we were before (in 2011- 12), $ 306 billion," Commerce and Industry Minister Anand Sharma said during the Board of Trade meeting today. In 2012- 13, he said, the trade deficit might reach a record level of $ 193- 196 billion. In FY12, it was $ 185 billion. " This is not a small number. Every institution must ensure faster movement," said Sharma. As part of the ₹ 2,000- crore package, the government was expected to enhance the duty drawback rates by at least three per cent, a senior official told Business Standard. In the Budget for 2013 |
| The Reserve Bank of India |
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Bangalore, 22 March (RBI) will shortly issue a notification on implementation of Basel- III norms by banks. The new system will come into effect from April 1, RBI Governor D Subbarao said today. "Risk management is a big challenge for banks. Based on the lessons we learnt on the crisis, we moved from Basel- I to Basel- II and then to Basel- III. We believe, even though our banking system is safe and sound, we must adopt advanced risk management practices," Subbarao told members of the Bankers' Club. "Just because we were protected from this crisis, it does not mean we are protected from every crisis in the future. As a financial system, we are vulnerable to pressures. So, we must adopt and implement new norms. We are going to issue the notification shortly implementing Basel- III norms from April 1," he said. In his close to an hour- long address on ' Indian Banking – Looking beyond the crisis', Subbarao said one concern of Basel- III is that as it requires a higher level of capital; bank credit will be more expensive. "That is a problem for us because our economy is at the stage where requirement for credit will go up. The credit to GDP ratio will go up for several reasons. We are a structurally transforming economy." In a structurally transforming economy, the credit to GDP ratio will go up. For every unit of GDP, there is a need to generate more credit," he said. |
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Company Secretary, Chennai
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