The Rajya Sabha on Monday today passed a bill providing for a mechanism to resolve disputes between financial regulators, with Pranab Mukherjee saying that it is an ''ad hoc arrangement''. He also assured the house that the autonomy of the watchdogs will not be compromised.
The government is still working on a permanent body to settle the inter-regulator disputes such as the recent turf war between the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority of India, Mukherjee said.
''It is not a knee-jerk reaction, it is ad hoc arrangement,'' he said in the Rajya Sabha replying to a debate on the Securities and Insurance Laws (Amendment and Validation) Bill, 2010. The bill provides for a joint mechanism, headed by the finance minister, to resolve the disputes between different financial regulators.
However, before the dispute is placed before the joint mechanism it would, as in the past, go to the high level coordination committee headed by the Reserve Bank of India governor, he said.
Mukherjee said the government had to issue an ordinance on 18 June providing for such a mechanism, in the wake of the SEBI-IRDA turf war around controlling unit-linked insurance products or ULIPs.
Allaying apprehensions on the government interference in the autonomy of RBI and financial regulators, he said there was no such intention. ''What do you expect me to do … will I remain a mute spectator, if they (regulators) quarrel like petulant children? My concept of autonomy is not like that ... it is not good for the economy,'' he said.
Mukherjee said with growing economy, there would be more regulators in different sectors and there could be possibilities of inter-regulator disputes. For resolving such disputes, there should be a permanent mechanism. The government has already floated a discussion paper on the proposed financial stability development council (FSDC).
As the paper has been placed in the public domain, it is being debated whether the FSDC would have statutory powers or not.
The Lok Sabha had passed the bill on 2 August.