Financial autonomy for regulators to stay, says Govt

The Bill — Securities & Insurance Laws (Amendment) & Validation, Bill 2010 – finally received the seal of approval by Parliament after the Rajya Sabha cleared the legislation with Finance Minister Pranab Mukherjee asserting that the government would not dilute autonomy of any of the financial regulators.  The bill, which also sought to replace the ordinance of June 18 which had brought within jurisdiction of Irda the power to regulate “life insurance business” that may include hybrid insurance products like Unit Linked Insurance Policy (Ulip), was earlier approved by the Lok Sabha by voice vote.

Intervention on failure

Mukherjee said the proposed joint committee headed by himself would interfere only when the regulators fail to settle the disputes bilaterally.

“Disputes among regulators are not good for financial market. It is not good for the economy. There has to be some mechanism to address it,” he said. While asserting that the proposed joint mechanism would not be a “super regulator” he also clarified that the setting up of the joint panel would not interfere with the Reserve Bank’s monetary policy functioning.

He said the bill had addressed the concerns of  Governor of the Reserve Bank of India, who had expressed discomfort at the formation of any such body, apprehending interference with the apex bank’s monetary policy functioning.

“In no way we will interfere with the monetary authority of the RBI,” Mukherjee assured the Upper House.