India needs a new financial regulatory architecture
A robust financial system ensures that funds move in a cost effective way.
India’s current regulatory architecture for the financial sector is a maze. There are over 60 Acts with myriad rules and regulations that govern the sector, some of which have been written decades ago. In addition, many ad hoc changes have been made over time to these regulations. As things stand, the Indian financial sector is suffering from regulatory gaps, overlaps, inconsistencies and also provides opportunity for regulatory arbitrage. Securities and Exchange Board of India’s (Sebi) extended litigation against the Sahara group, and the recent investigations on alleged money laundering by some banks using insurance products are good examples of both regulatory gaps as well as opportunities for arbitrage.