Mumbai: Finance minister Pranab Mukherjee said on Tuesday the autonomy of various regulators in the financial sector will not be curbed.
He, however, declined to answer questions on whether his ministry will table in Parliament an ordinance issued on 18 June that proposes a statutory body to oversee any dispute between regulators.
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President Pratibha Patil had promulgated the ordinance that proposed to constitute a statutory joint committee headed by the finance minister that would resolve disputes between financial sector regulators.
The ordinance was issued to settle a dispute between capital markets regulator Securities and Exchange Board of India (Sebi) and Insurance Regulatory and Development Authority (Irda), over the jurisdiction of unit-linked insurance policies.
The ordinance, however, also amends a chapter in the Reserve Bank of India (RBI) Act that proposes a mechanism to resolve regulatory disputes on certain hybrid instruments currently overseen by the central bank and Sebi.
“The ordinance lays clearly the point that if there be a conflict between two regulators, in the space of the hybrid jurisdiction, then this joint mechanism will interfere,” Mukherjee said on the sidelines of an event in Mumbai.
“Joint mechanism contains three members from the government, including the finance minister, and four members are four regulators. Therefore, the intention is quite clear. We are not going to interfere with the autonomy of the regulators in their respective areas,” Mukherjee said.
On Tuesday, RBI governor D. Subbarao has said that the central bank had reservations “in connection with the ordinance that they (finance ministry) have issued regarding settling disputes on regulatory jurisdiction”.
If the government does not bring a Bill within three months of the ordinance’s issue, it will lapse automatically, and by default reinstate the status quo in regulatory supervision.
Mukherjee did not answer questions on whether his ministry plans to move the ordinance in the monsoon session of Parliament.
Under the present mechanism, a high-level coordination committee on financial markets, headed by the RBI governor, debates regulatory issues.
However, its decision is not binding as it is not a statutory committee.
The central bank has previously resisted a proposal to make the committee statutory, saying the system has withstood the test of time and that if the committee is made a statutory body, suggestions from members would not be free-flowing as minutes of discussions would then have to be maintained.