No need for financial super regulator, says Rangarajan

Disagreeing with Srikrishna panel’s suggestions, PMEAC Chairman C Rangarajan has said India does not need super regulator for financial sector markets but need better co-ordination among existing regulators.

“At this particular time, it may be advisable to continue with existing system, rationalise the overlap if there are any and and try to improve the co-ordination among different regulators,” he said when asked about suggestions of B N Srikrishna committee for a single regulator to deal with financial markets.

According to Rangarajan, former Reserve Bank of India governor, “we still have not reached a stage in which our various financial segments have developed to full extent.”

Citing examples, he further said “the experience that is now available does not point to a very clear evidence as to which is better. UK had a single regulator and it ran into problems. USA had multiple regulators and they also ran into problems”.

Justice B N Srikrishna-headed Financial Sector Legislative Reforms Commission’s draft report has suggested setting up a single regulator for financial markets. “The draft report talks in terms of single regulator for all financial other than banking. This again is not very consistent,” Rangarajan noted.

Recently, the Commission in an approach paper had proposed a unified regulator for financial sector laws, including those for markets, insurance, commodities and pensions.

It, however, had proposed to keep banking out of the regulator’s purview and had also suggested setting up of a financial redressal agency (FRA) to address consumer complaints against companies across the financial sector.

The approach paper had underlined the need for establishing an independent debt management office and a financial sector appellate tribunal to hear appeals against regulators. 

As per the proposal, there would be five new agencies besides Reserve Bank and FSDC. The new ones would be UFA, Financial Sector Appellate Tribunal (FSAT), Financial Redressal Agency (FRA), Debt Management Office (DMO) and Resolution Corporation.

The Unified Financial Agency (UFA), the approach paper had said, would deal with all financial firms other than banking and payments.