Parliament passes bill to resolve 'quarreling' regulators rows

However, till a permanent arrangement through the proposed Financial Stability Development Council (FSDC) is in place, the bill amending the SEBI and IRDA laws provides an ad hoc dispensation, Finance Minister Pranab Mukherjee said in the Rajya Sabha, which passed it.

The Lok Sabha has already passed Securities and Insurance Laws (Amendment and Validation) Bill, 2010.

Mukherjee said though it is "not a knee-jerk reaction, it is an ad hoc arrangement". He said it is the Finance Minister, who is accountable to Parliament and thus no regulator can be above him.

"If somebody believes he is above the finance minister in finance or money matters, he may believe so. I cannot accept it," Mukherjee said.

The bill provides a joint mechanism, headed by the Finance Minister, to resolve inter-regulators disputes such as the turf war between watchdog bodies - SEBI and IRDA - over regulation of ULIPs, which are hydrids between insurance and mutual funds.

Reserve Bank Governor would be Vice Chairman of the joint mechanism. The provision for elevating RBI Governor as vice chairman of the joint panel was incorporated in the bill, which replaces the June 18 ordinance. RBI chief D Subbarao had expressed reservation over the ordinance, apprehending dilution of autonomy of the central bank.

Airing his "grievance" against regulators for "quarreling like petulant children" Mukherjee said he could not have remained silent to the goings-on.

"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.

The Finance Minister said government is still working on a permanent body to settle the inter-regulator disputes.

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), to be headed by Finance Minister. It is being debated whether the FSDC would have statutory powers or not.

Mukherjee said there would not be any interference in RBI's autonomy in its role as a monetary authority.