New Indian financial sector regulator will exclude banks

Reserve Bank of India to continue as banking sector regulator.

The proposed Unified Financial Agency will be a super regulator merging oversight functions of market, commodity, insurance and pension regulators.

It will absorb the functions of the Securities and Exchange Board of India; the Insurance Regulatory and Development Authority; the Pension Fund Regulatory and Development Authority and the Forward Markets Commission, according to a plan by the Financial Sector Legislative Reforms Commission.

FSLRC also suggested eliminating the multiple agency architecture for scanning foreign capital inflows.

It also suggested establishing a debt management office for raising resources for government expenses. The government currently raises funds by issuing bonds through RBI.

RBI will continue regulating banking operations, monetary policy and the payment system.

Once the FSLRC’s recommendations are adopted, the government will have to make legislative changes to about 25 existing laws to facilitate the new structure.