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Journalism of Courage
The Financial Sector Legislative Reforms Commission,long promised and much delayed,was finally announced on Thursday. Headed by a former Supreme Court judge,B.N. Srikrishna,the panels 11 members include bankers,such as P.J. Nayak of Axis Bank; economists,such as M. Govinda Rao of the National Institute of Public Finance and Policy; and regulators,such as former pension funds overseer,Dhirendra Swarup. The finance minister promises a 24-month term for the commission,and its members will have to work hard indeed,for their assigned task might well be the largest and most complex handed to any reform commission in independent India. They are to completely rewrite Indias financial-sector laws and range beyond them,too.
The immediate provocation for thinking about such a committee might have been the financial crisis of 2008,and the renewed focus it brought to ensuring that regulatory lacunae dont permit the incubation of problems that could bring an entire system to a standstill. Indias regulatory apparatus has been built up piecemeal,and as the financial sector grows and deepens,oversight cannot continue to be haphazard. The commission will have to streamline regulatory architecture,and lay out a common set of principles for regulation. And that task is far from easy: it will require the review,and possible redrafting,of as many as 60 different acts of Parliament. For banking alone,there are different regulations that cover private,foreign and nationalised banks,which must be harmonised. And the regulatory and proprietorial interests of the government must be properly separated in the reformed framework.
