New bill seeks to make RBI governor vice chief of financial sector regulator
27 Jul 2010
The government today introduced the `Securities and Insurance Laws (Amendment) and Validation, Bill 2010,' that somewhat dilutes the earlier ordinance for a super regulator headed by the finance minister.
The new bill upgrades the status of the governor of the Reserve Bank of India (RBI) from an ordinary member to the vice chairman of the commission, thus trying to address RBI's concerns over its role as financial sector regulator.
The RBI governor had come out against the government move to rank Reserve Bank of India (RBI) on a par with sectoral and market regulators like Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDA) and the Pension Fund Regulatory and Development Authority (PFRDA).
RBI governor D Subbarao had expressed reservation about the legislation saying that it would dilute the authority of the central bank.
The Securities and Insurance Laws (Amendment) and Validation, Bill 2010, still makes the finance minister the main arbiter in disputes among market and financial sector regulators like SEBI, IRDA and PFRDA.
However, the bill specifically states that the sectoral regulators will directly move the joint commission rather than the government for resolving any disputes among them.
