Multiplicity of regulators worries Chidambaram

Govt for plugging regulatory gaps in financial sector

New Delhi (Agencies): Expressing worry over multiplicity of regulators, the Finance Minister P Chidambaram on Wednesday said it create gaps, ambiguity and regulatory overlap on their roles.

"The present arrangements have a number of gaps, where no regulators are unambiguously in-charge, such as issue of regulatory oversight over diverse Ponzi schemes that we have discovered recently. These are cleverly designed to be out of the purview of regulatory agencies," he said at a seminar on the Indian Financial Code organised by Institute of Company Secretaries of India.

Earlier, Financial Sector Legislative Reforms Commission (FSLRC) submitted its report to the Finance Ministry, recommending creating a unified regulator for the financial sector by merging SEBI, IRDA, PFRDA and Forward Markets Commission with it.

On the suggestion of FSLRC to enact IFC as an omnibus legislation to regulate financial sector, the Minister said: "I am not sure how much this law will go through in the same fashion when it finally goes to Parliament (but it) will be a major milestone in Indian financial sector reforms." He also pointed out that there were battles between regulators over the jurisdiction

For instance, when there was a fight between Sebi and Irda over control on unit linked insurance products, finance ministry had to intervene to sort out the issue.

The Indian financial sector is governed by over 60 Acts and regulations being followed by about 80 years. Chidambaram said many of the elements of the FSLRC recommended legal processes are not unacceptable to the present laws. However, he suggested that the finance ministry along with regulators to try and operationalise some of the suggestions within the scope of the present laws.

On Ponzi schemes which causing huge losses to common people, Chidambaram said there are regulatory gaps and efforts are being made to frame a new law to oversee financial sector.

"The present arrangements have a number of gap areas, where no regulators are unambiguously in-charge, such as issue of regulatory oversight over diverse Ponzi schemes that we have discovered recently. These are cleverly designed to be out of the purview of regulatory agencies," he said.

The department is moving towards another inter-ministerial committee to offer suggestions on various acts to avoid overlap to nab offenders in scams like Saradha.A Incidentally, the first meeting of this committee is scheduled to be held on Thursday.

Referring his experience, the Finance Minister said, passing legislation in India is not easy, it has become even more complex with coalitions. "Nevertheless, we cannot give up," he said.