Narendra Modi seeks fast revamp of financial sector rules, wants report on implementation of FSLRC guidelines

NEW DELHI: Prime Minister Narendra Modi wants to expedite the revamp of financial sector rules as recommended by the Financial Sector Legislative Reforms Commission ( FSLRC) after the matter is said to have been flagged by the President.

The Prime Minister’s Office has sought a status report from the finance ministry on the implementation of FSLRC recommendations after their tardy implementation was brought to the attention of Modi by President Pranab Mukherjee early October, a few days ahead of the bureaucratic reshuffle that saw Rajiv Mehrishi replacing Arvind Mayaram as finance secretary, said a government official aware of the deliberations.

The perceived delay is said to be among the reasons for the change in personnel. The FSLRC report pitched for a complete overhaul of the financial sector, governed by as many as 60 Acts and multiple rules and regulations. Some of these, such as the RBI Act and the Insurance Act, date back to the 1930s when many of the financial products available today couldn’t have been conceived of. Similarly, today’s derivatives market didn’t exist in 1956, when the Securities Contract Regulation Act was enacted.


The finance ministry is understood to have sent a detailed response to the PMO on implementation milestones after having received the report.

As finance minister, Mukherjee had announced the government’s intent to set up the FSLRC in the 2010-11 budget. The commission was notified in March 2011 . The panel submitted its report on March 22, 2013.

It suggested a uniform Indian Financial Code and the creation of a Unified Financial Agency to subsume the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority and the Forward Markets Commission, besides the establishment of an independent debt management office and a Resolution Corporation apart from providing a statutory framework for a Financial Sector Development Council.

P Chidambaram, who succeeded Mukherjee as finance minister, placed the report in the public domain for feedback while regulators were asked to move ahead with the non-legislative reform agenda. Those items that needed parliamentary approval were left to the new government.

The Modi administration has expressed its support for the changes proposed with the PM being very keen on replacing or doing away with obsolete laws in all sectors.“There are some important recommendations of the Financial Sector Legislative Reforms Commission like the enactment of the Indian Financial Code awhich is considered necessary for better governance. It will be my endeavor to complete the ongoing process of consultations with all the stakeholders expeditiously on this,” finance minister Arun Jaitley said in his July budget speech.