Icrier for single financial regulator to deal with crisis

NEW DELHI: The city-based think tank Icrier on Thursday suggested that government should set up a single financial sector regulatory authority to deal with the issues in real time and ward off the adverse impact of the global financial upheaval.

Talking about the lessons that India can draw from the ongoing financial crisis, Indian Council for Research on International Economic Relations (Icrier) Director Rajiv Kumar said, a single financial regulatory authority would ensure, "...much more effective and real time coordination between regulators dealing with different segments of financial market".

Presently, different segments of Indian financial market such as banking, insurance, stock markets, etc, are regulated by different entities including RBI, IRDA and SEBI. Their activities are coordinated by a High Level Coordination Committee on Finance Markets (HLCCFM).

Kumar further said that there is an urgent need to bring investment banks and hedge funds within the ambit of the regulatory regime.

The assumption that some entities like investment banks and hedge funds should remain outside the regulatory regime must be discarded, he said, adding, "Their actions (greed in most cases) ultimately do create a systemic distress".

Referring to the other lessons that India can draw from the ongoing financial crisis, Kumar said: "We need to examine the role of the credit rating agencies and identify the weaknesses, including possible conflicts of interest that they suffer from."