Seeking to reform the financial sector regulations, the Government-appointed FSLRC has proposed the Indian Financial Code Bill to pave the way for the creation of a unified financial regulator and limit the role of the Reserve Bank to monetary management.
Under the proposed regulatory architecture, the Securities and Exchange Board of India (SEBI), the Forward Markets Commission (FMC), the Insurance Regulatory and Development Authority (IRDA) and the Pension Fund Regulatory and Development Authority (PFRDA) would be merged into a new unified agency.
The Reserve Bank, however, will continue to exist with modified functions, said the two-volume report of the Justice B. N. Srikrishna headed Financial Sector Legislative Reforms Commission (FSLRC).
In order to give effect to its recommendations, the Commission has come out with a draft Indian Financial Code Bill, containing 450 clauses and six schedules.
The report, however, is marked by four dissenting notes by members P. J. Nayak, K. J. Udeshi, Y. H. Malegam and Jayanth R. Varma. They have differed with the recommendations of the panel on different issues.
The Commission, which had submitted its report to Finance Minister P. Chidambaram last week, had 10 members, besides Chairman Srikrishna.
“The Commission is mindful that over the coming 25 to 30 years, the Indian GDP is likely to become eight times larger than the present level, and is likely to be bigger than the US GDP as of today...The aspiration of the Commission is to draft a body of law that will stand the test of time,” the report said.