Mumbai panel moots Sebi as master fin watchdog
The government must revamp the regulatory architecture in the financial sector and bring in an umbrella legislation, Financial Services Modernisation Act, to bring all regulatory and supervisory functions governing the domestic financial regime.
By TNN |
NEW DELHI: The government must revamp the regulatory architecture in the financial sector and bring in an umbrella legislation, Financial Services Modernisation Act, to bring all regulatory and supervisory functions governing the domestic financial regime.
The high-powered expert committee (HPEC) on making Mumbai an international financial hub has favoured placing all regulatory functions relating to organised financial trading in currencies, bonds, equities, corporate bonds and commodity derivatives under Sebi domain.
The panel has suggested creating an international financial services appellate tribunal to offer a comprehensive appeals procedure against all actions of financial regulators. The report, submitted to the finance minister on Tuesday, has advocated bringing all regulations presently dispersed across many Acts, including the RBI Act, the Foreign Contribution (Regulation) Act and the Companies Act, under one umbrella legislation.
Emphasising the need to migrate from rule-based regulation to principles-based regulation, the committee has said the new law governing financial system regulation should articulate broad principles and provide sufficient flexibility for more rapid financial innovation.
It has been envisaged that the proposed new Act should “embed a redrafting of the Banking Regulation Act (BRA), shifting towards principles-based regulation, and giving banks greater flexibility in operations and management than is presently the case”. The panel has favoured a merger of the new securities law with the new banking law despite the existent of two distinct regulatory bodies.
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“This would underline the unity of finance and increase the extent of coherence found in different parts of finance,” it has been said. The HPEC has emphasised the need to have direct market access on domestic exchanges to match the situation with foreign exchanges in other IFCs. The country must open its arms to global legal firms that operate in other IFCs, all global accounting firms, tax advisory, information technology and business consulting firms that support IFS industry, the report says.
In what may require a major policy overhaul, the committee has said a reduction in the state’s present shareholding in all types of financial firms be effected in a time-bound manner, with a full exit by 2015.
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