Mumbai: Finance Minister Pranab Mukherjee on Tuesday said his ministry will not intervene in the autonomy of regulators, amid reservations expressed by the Reserve Bank over the recent Ordinance on Unit-Linked Insurance Products.
“The intentions are quite clear. We are not going to intervene in the autonomy of regulators,” Mukherjee told reporters on the sidelines of an event here.
A key finance ministry source also said the committee to be set up to decide on the jurisdiction issue of hybrid products will have three people from the government and four regulators.
“So there cannot be threat to autonomy of regulators,” he said.
Concerned over the dilution of its role in dealing with inter-regulatory disputes, RBI Governor D Subbarao had on Monday met the Finance Minister and asked the government to reconsider the ordinance it had issued last month to end the Irda-Sebi turf war over control of Ulips.
“I have come to meet the Finance Minister in connection with the ordinance that they have issued regarding settlement of the dispute on regulatory jurisdiction. RBI has certain reservations and concerns, which we have expressed in the letter,” Subbarao had said after the meeting.
Subbarao also raised issues concerning the role of the central bank in light of the ordinance.
The government last month ended a two-month-long turf war between insurance regulator Irda and capital market watchdog Sebi through an ordinance that made it clear that Ulips would be regulated by Irda.
The ordinance also sought to create a high-level panel, chaired by finance minister Pranab Mukherjee, that would sort out all issues of jurisdiction regarding hybrid products.
Ordinances are in the nature of law and are promulgated by the President when Parliament is not in session. They need to be ratified by Parliament within a stipulated time.
Fearing that the ordinance would dilute the central bank’s role as financial sector coordinator, the RBI has reportedly requested the finance ministry to let the ordinance lapse and not covert it into a law.
Unless the government seeks approval for the Ulip ordinance in the forthcoming Monsoon Session of Parliament, it will lapse and cease to be valid.
Currently, inter-regulatory issues are looked into by a High Level Coordination Committee (HLCC), comprising financial sector watchdogs and finance ministry officials and headed by the RBI.