RBI proposes working group to coordinate with SEBI, IRDA
The Reserve Bank has proposed setting up of a working group in consultation with the market regulator SEBI and insurance regulator IRDA to identify the sources and nature of potential conflicts of interest.
By PTI |
MUMBAI: The Reserve Bank has proposed setting up of a working group in consultation with the market regulator SEBI and insurance regulator IRDA to identify the sources and nature of potential conflicts of interest.
The group is also proposed to make recommendations to avoid conflicts of interest between the three regulators, RBI said in its Report on Trend and Progress of Banking in India 2004-05.
"The conflict of interest in the financial sector might have a negative impact on investor confidence, efficacy of the regulatory framework and, above all, the credibility of the financial service providers," the report released yesterday said.
The emergence of financial conglomerates offering a range of financial services--banking, insurance, securities -- on a global basis presents significant challenges to the supervisors for effective discharge of their responsibilities, the Reserve Bank said.
The Working Group on Financial Conglomerates in its report on May, 2004 suggested criteria for identifying financial conglomerates, a monitoring system for capturing intra-group transactions and exposures and a mechanism for inter-regulatory exchange of information in respect of financial conglomerates.
As a follow up measure, the Reserve Bank constituted the Financial Conglomerate Cell within the Department of Banking Supervision. The FCC is a nodal agency, which coordinates with the SEBI and IRDA on matters of supervision of financial conglomerates. MORE PTI IND IL MAJ SM 11251611 DEL The Reserve Bank has put in place an oversight framework, which envisages periodic sharing of information among regulators on concerns arising out of analysis of data received from the conglomerates.
The informaion is also shared on any ohter significant issues in the pocession of the principal regulaor which might have a bearing on the group as a whole, the report said.
The RBI's recent initiative to hold half-yearly discussion meeting with the Chief Executive Officer of the conglomerate in association with other principal regualtors to address outstanding issues and supervisory concerns would further strengthen the system of sharing of information among the domestic supervisors, the report added.
Pointing out that operations of financial conglomerates with overseas presence also raise concerns, the Reserve Bank said there is no legislation in India which provides for collaborative arrangement among supervisors.
"Till such time a legal framework for cross-border supervision is enacted, supervisory co-ordination could be initiated by executing general or specific MoUs to address risks associated with financial conglomerates and promote systemic stability," the report said. PTI IND IL MAJ SM 11251609 DEL
The group is also proposed to make recommendations to avoid conflicts of interest between the three regulators, RBI said in its Report on Trend and Progress of Banking in India 2004-05.
"The conflict of interest in the financial sector might have a negative impact on investor confidence, efficacy of the regulatory framework and, above all, the credibility of the financial service providers," the report released yesterday said.
The emergence of financial conglomerates offering a range of financial services--banking, insurance, securities -- on a global basis presents significant challenges to the supervisors for effective discharge of their responsibilities, the Reserve Bank said.
The Working Group on Financial Conglomerates in its report on May, 2004 suggested criteria for identifying financial conglomerates, a monitoring system for capturing intra-group transactions and exposures and a mechanism for inter-regulatory exchange of information in respect of financial conglomerates.
As a follow up measure, the Reserve Bank constituted the Financial Conglomerate Cell within the Department of Banking Supervision. The FCC is a nodal agency, which coordinates with the SEBI and IRDA on matters of supervision of financial conglomerates. MORE PTI IND IL MAJ SM 11251611 DEL The Reserve Bank has put in place an oversight framework, which envisages periodic sharing of information among regulators on concerns arising out of analysis of data received from the conglomerates.
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The informaion is also shared on any ohter significant issues in the pocession of the principal regulaor which might have a bearing on the group as a whole, the report said.
The RBI's recent initiative to hold half-yearly discussion meeting with the Chief Executive Officer of the conglomerate in association with other principal regualtors to address outstanding issues and supervisory concerns would further strengthen the system of sharing of information among the domestic supervisors, the report added.
Pointing out that operations of financial conglomerates with overseas presence also raise concerns, the Reserve Bank said there is no legislation in India which provides for collaborative arrangement among supervisors.
"Till such time a legal framework for cross-border supervision is enacted, supervisory co-ordination could be initiated by executing general or specific MoUs to address risks associated with financial conglomerates and promote systemic stability," the report said. PTI IND IL MAJ SM 11251609 DEL
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