Tenth Anniversary Special
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Regulatory Bodies & Rulings
Regulators: Lording it over, benignly
S. Vaidya Nathan
IF India has an orderly and regulated market in financial products and, to a lesser extent, in telecom, credit is due to Securities and Exchange Board of India, the Reserve Bank of India, the Insurance Regulatory and Development Authority and the Telecom Regulatory Authority of India.
When each sector faced a situation marked by chaos, the regulators success created a level playing field and a transparent market that have made life safer and easier for investors and consumers. Each has had to work in the face of considerable lobbying; there have been occasions when their efforts have served the interests of a few players rather than the market. For instance, the manner in which TRAI smoothened the process of limited mobility service providers such as Reliance Infocomm and Tata Teleservices morphing into full-fledged cellular mobile services.
Despite some policy moves, there is little to complain about the overall report card of the regulators.
But , the role of SEBI has been subject to closer scrutiny than the rest as it presides over the stock market. SEBI has completed the process of putting in place a regulatory framework for key aspects of the stock market. Now, it has to speed up the implementation of its regulations, which is where it has been found wanting, yet. Thus, it faces a more arduous task than the RBI, the IRDA and TRAI, as its jurisdiction encompasses a large number of players.
The RBI, by virtue of its long-standing supervision over the banking sector, has implemented its policy measures with considerable ease. The progress achieved in cleaning up, and imparting transparency to the balance-sheet of the financial sector may be its most important contribution to the economy from a long-term perspective. The effect of the IRDA's unobtrusive, but significant, role in ushering in the private sector participation in insurance, and TRAI's more visible, although contentious, role in the telecom sector, are likely to be more pronounced in the years ahead.
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