RBI sets up technical body to fine-tune regulation

MUMBAI: In an effort to fine-tune the regulation of the financial sector, the Reserve Bank of India (RBI) on Thursday set up a standing technical committee on financial regulation. Headed by RBI deputy governor KJ Udeshi, the committee will advise the central bank on the regulation of banks, non-banking institutions and other market participants.
The committee will initially function for two years from the date of its first meeting. It will review the current regulatory regime to help the RBI in making norms simpler and rationalise the regulations. This would be to move towards clearer and unambiguous regulatory prescriptions and enhance internal control systems.
The members of the committee are SBI chairman AK Purwar, Punjab National Bank chairman SS Kohli, Sebi member AK Batra, acting chairman of IDBI M Damodaran, UTI Bank chairman PJ Nayak, HSBC CEO Niall Booker, Crisil director MG Bhide, National Law University vice-chancellor NL Mitra, Sundaram Finance director GK Raman and IBA CEO HN Sinor. The permanent invitees are RBI deputy governors Vepa Kamesam and Rakesh Mohan and executive director Shyamala Gopinath.
The panel will consider the existing regulatory practices on prudential norms and disclosure standards for both banks and non-banks and recommend measures for their progressive alignment with the best international practices consistent with the country’s needs. It will also advise on the changes needed from time to time, in the regulatory framework, on account of the emerging diversification of the business mix of the financial services industry.
The committee will help analyse the harmonisation of regulatory and prudential norms for various entities in the financial sector in alignment with prescriptions of other regulators such as Sebi and Insurance Regulatory & Development Authority (IRDA).
It will explore regulatory responses to developments in financial markets, come out with steps to be taken by the RBI and banks in the context of Basel-II norms and suggest measures for strengthening corporate governance in RBI-regulated institutions.
It will provide advice on any other specific issue relevant to the regulation of the financial sector, either referred to it by the RBI or considered appropriate by the committee. “It will meet as often as may be necessary, but ordinarily once in two months,� said an RBI release.