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The Centre on Thursday issued the resolution notifying the constitution of the 11-member Financial Sector Legislative Reforms Commission (FSLRC), headed by Mr Justice (retired) B.N. Srikrishna.
The FSLRC is in pursuance to the announcement made by the Union Finance Minister, Mr Pranab Mukherjee, in his 2010-11 budget speech to simplify and rewrite financial sector legislations, rules and regulations and bring them in harmony with the requirements of India's fast growing financial sector, an official statement said.
The FSLRC, to be headquartered in Delhi, will submit its report to the Union Finance Minister within 24 months, the statement said. The first meeting of the Commission is scheduled to be held on April 5.
In the long-term, FSLRC would help usher in the next generation of reforms, contribute to efficient financial intermediation enhancing the growth potential of the nation, the statement said.
The Commission would remove ambiguity, regulatory gaps and overlaps among the various legislations, an official statement said. This had become necessary as the institutional framework governing India's financial sector was built over a century, it added.
There are over 60 Acts and multiple Rules/Regulations in the sector and many of them date back decades when the financial landscape was very different from what is obtaining today, the statement noted, adding “Large number of amendments made in these Acts over time has increased the ambiguity and complexity of the system.”
The members of the Commission are: Justice (retired) Mr Debi Prasad Pal; former PFRDA Chairman, Mr D. Swarup; former Chairman of Axis Bank, Mr P.J. Nayak; the Prime Minister's Economic Advisory Council member, Prof M. Govinda Rao; Ms K.J. Udeshi, Mr Yezdi H. Malegam, Prof. Jayant Varma, Mr C. Achutan, Mr C.K.G. Nair (Secretary to the Commission), and the serving Joint Secretary (Capital Markets).
The Terms of Reference of the Commission include: examining the architecture of the legislative and regulatory system governing the financial sector in India and to look at the most appropriate means of oversight over regulators and their autonomy from the government.
It will also examine if legislation should mandate statement of principles of legislative intent behind every piece of subordinate legislation in order to make the purposive intent of the legislation clear and transparent to users of the law and to the Courts.
It would also look at feasibility if public feedback for draft subordinate legislation should be made mandatory, with exception for emergency measures. Besides, it will “examine the interplay of exchange controls under FEMA and FDI Policy with other regulatory regimes within the financial sector.” It will also examine the role of state governments and legislatures in ensuring a smooth inter-state financial services infrastructure in India.
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