Financial Sector Legislative Reforms Commission: Some Challenges
The Financial Sector Legislative Reforms Commission (FSLRC), made under Justice B. N. Srikrishna, made some far reaching recommendations, many of which came under criticism from various sections. The report called for a radical overhaul of the financial architecture.
While the issue has always been a crucial one, it was generally neglected and ignored. But the Srikrishna Commission (FSLRC) revived the issue to life.
Among the most contentious proposals of the FSLRC include-
the setting up of two entities- One, a new ‘super-regulator’, the United Financial Regulatory Authority (UFRA); and Two, a Financial Sector Appellate Tribunal to review the regulatory decisions.
The UFRA has been proposed as solely responsible authority for the oversight of the securities market, insurance, pensions and commodities. Thus, it would take over the functions of the existing regulators, including SEBI and IRDA. With this, there would only be two regulators left in the Indian economic system- the RBI and the UFRA.
However, under the new system, the RBI might have a reduced role, mainly confined to being the monetary authority and regulator of banks.
FSLRC has also recommended the formation of a new Monetary Policy Committee, which would be domintaed by the government nominees. It is proposed to set the policy interest rates. It also recommended that the Finance Minister be made the Chairman of the Financial Stability and Development Council (FSDC).
An analysis of the recommendations of the Commission give a hint towards a biased attitude of the FSLRC towards the government.
Courtesy: The Hindu
Team Aspirant Forum