By IANS,
New Delhi : The Rajya Sabha Monday passed a bill to address disputes among financial regulators like the one over unit-linked insurance plans, with Finance Minister Pranab Mukherjee’s assurance that the autonomy of these watchdogs will not be compromised.
“There is no question of compromising the autonomy of any regulator,” Mukherjee said, as the upper house passed the Securities and Insurance Laws (Amendment and Validation) Bill 2010 to replace an earlier ordinance.
“It’s not a matter of the conflict between the government and the regulators. It is aimed to solve disputes between the regulators,” the finance minister said.
The Lok Sabha had passed the bill Aug 2 that addresses the 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).
Mukherjee said a joint committee headed by the finance minister would interfere only when the regulators fail to settle the disputes bilaterally.
“Disputes between regulators are not good for the financial market. It is not good for the economy. There has to be some mechanism to address it,” he said, adding: “This cannot be a permanent arrangement.”
The bill provides for a joint mechanism headed by the finance minister to resolve differences among the financial regulators such as those for equities insurance and pension. Mukherjee made it clear that the idea was not to set up a “super” regulator.
It also seeks to amend the Reserve Bank of India Act, 1934, the Insurance Act, 1938, the Securities and Exchange Board of India Act, 1992.
The bill also addresses the concerns of Reserve Bank of India Governor D. Subbarao, who 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.