Friction between regulators almost always generates more interest than stories about cooperation. Hence, not enough credit has been given to the Securities and Exchange Board of India (Sebi) for the help it has been giving the Reserve Bank of India (RBI) in the long war against bad loans.

Last week, Sebi eased merger and acquisition rules to help the resolution of stressed assets weighing down bank balance sheets. Those who buy stakes in debt-laden firms will not have to make open offers, subject to certain stringent restrictions. This is almost a repeat of what happened two years ago, when the markets regulator flanked the banking regulator as the latter introduced the strategic debt restructuring scheme to let lenders convert debt into equity in defaulting firms.

Any bank clean-up should ideally involve the sale of assets, and Sebi has done well in relaxing M&A norms to ease the process. Sebi and RBI have in the past fought for regulatory territory in several corners of the financial markets, but the instances of working together should not be forgotten.

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