By IANS,
New Delhi : The Lok Sabha Monday passed a bill to set up a panel to resolve financial disputes between sectoral regulators after Finance Minister Pranab Mukherjee assured the house that it will not be a “super regulator” and dilute the autonomy of the regulators.
“It is true that there were many apprehensions that whether we were going to dilute the autonomy
of the regulator. I have no such intention. I am limiting the activity. It will be only jurisdictional issues, not in other matters,” said Mukherjee during a debate on the bill.
The Securities and Insurance Laws (Amendment and Validation) Bill, 2010, replaces an ordinance issued last month following a turf war between the Securities and Exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority (IRDA) over the popular unit-linked insurance plans (ULIPs).
“It is not a super regulatory body. Parliament is creating it,” he said, adding the government would intervene only to resolve deadlocks.
The bill provides for a joint mechanism headed by the finance minister to resolve differences among the financial regulators – Sebi, IRDA, RBI and PFRDA.
Mukherjee said the first stage of arbitration would be a high-level committee chaired by the Governor of the Reserve Bank of India.
“If two regulators claim jurisdiction over the same product and if they are unable to resolve it, it will not come to the joint mechanism automatically. I have expressed my intention publicly and I have also made the institutional amendment.”
If the parties involved fail to come to an agreement, then as per the amendment of the ordinance, either of them can approach the joint mechanism which would be chaired by the Finance Minister and the RBI Governor would be its vice chairman.
The other members of the committee would be from the Sebi, IRDA, PFRDA, secretary, economic affairs, and the banking secretary.
The bill also addresses the concerns of the RBI as Governor Subbarao had expressed discomfort at the formation of any such body, apprehending interference with the apex bank’s monetary policy functioning.
“No way we are interfering with the monetary authority of the Reserve Bank of India. They are regulators. RBI is regulating banks. Reserve Bank will be disciplined only to that aspect in respect of the regulatory functioning,” Mukherjee said.
The bill seeks to amend the Reserve Bank of India Act, 1934, the Insurance Act, 1938, the Securities and Exchange Board of India Act, 1992.