After repeated suggestions from the Comptroller and Auditor General (CAG) of India,the finance ministry has finally said that surplus funds lying with regulators such as the Insurance Regulatory and Development Authority (IRDA) and the Securities Exchange Board of India (Sebi) may soon be transferred to the consolidated fund of India. According to senior finance ministry officials,a decision to this effect has already been taken and is expected to come into force from the next fiscal. This was a long-standing issue and the ministry is finally in the process of asking regulators to park its surplus funds in the Public Account of India, said the official. Financial regulators generate surplus funds by levying a fee on the companies and penalties paid by them. According to CAG,since regulators have been established under the Acts of Parliament,funds collected by them should be credited to the government account under Article 266 of the Constitution. Retention of surplus funds by these regulators,CAG says,is not consistent with the accounting procedure followed by other similarly placed independent regulatory bodies such as the telecom regulator,which currently maintains its accounts as part of government accounts. The Standing Committee on Finance (2009-10),too,in its 39th report on the Demands for Grants (2003-04) of the finance ministry,has recommended that with a view to maintain uniformity with respect to all regulatory authorities,it would be necessary that funds be deposited in the public account. The insurance regulator,however,still disagrees on the issue. Asking regulators to put surplus funds in the Public Account of India may not be legally correct. Financial regulators should be independent and,therefore,cannot be told to part with their surplus funds. This is how even the Reserve Bank operates. Moreover,we have surplus today,but we may or may not have them tomorrow. Today we have around 100 to 120 employees in IRDA. We might use these funds to expand our operations, said J Hari Narayan,chairman,Insurance Regulatory and Development Authority. According to the CAG report 2007-08,IRDA has around Rs 300 crore of surplus funds with them. As on date,the regulator is estimated to have nearly Rs 400 crore in its IRDA fund. Capital market regulator Sebi,on the other hand,deposits penalties collected in the consolidated fund of India. The rest of its funds are kept in the Sebi General Fund. The Director General of Audit Central Revenue has advised that money kept in the Sebi General Fund also be transferred into the consolidated fund of India. Guidelines for operationlising this account is being worked out by the Budget Division of the finance ministry.
