This refers to the report “North Block reassures Mint Road” (July 24). It says that the government is thinking of amending the ordinance on resolving jurisdictional disputes among regulators. Thus the proposal to make the RBI governor the vice-chairman of the Financial Stability and Development Council (FSDC) will restore his position as primus inter pares (first among peers). The FSDC will handle only those matters that are not resolved by the existing High-Level Coordination Committee on Financial Markets (HLCC) under the chairmanship of the RBI governor on a reference from the aggrieved regulator. The ideas betray a misunderstanding of the basis of criticism levelled against the new set-up. It is not so much about the status of the RBI governor — which, no doubt, is important — as it is about the role and responsibility of the central bank, which is charged with the objective of “monetary stability” in the Preamble to the RBI Act of 1934.
In general, financial institutions are more comfortable with being regulated by RBI than by the minions of the finance ministry who have a tendency to look at issues not from the nation’s point of view but from their own personal angles. I have heard from IAS officers serving in states complaints about the contemptuous treatment they get from their fellow officers in the same service whenever they go to them in Delhi to discuss a problem. Think of the bonanza of promotional opportunities that will open in the FSDC with a number of secretaries, additional secretaries, joint secretaries and others who would be fighting their own battles over jurisdictions! If the new body is going to deal only with issues that are referred to it — and they are not likely to be many — how will the secretariat utilise itself during the best part of the year? It will follow the Parkinsonian dictum: “Work expands to fill the time available for its completion.” It will be engaged in massive collection, processing and interpretation of data and information about the working of the 16 regulatory bodies in the country, thereby duplicating the work done elsewhere.
The Opposition has a duty to stand by the country and stop the process of devaluing established institutions which started from the days of Indira Gandhi. It should try to enlist the support of the allies of the Congress party in the government, pointing out that the failure of the ordinance to become an Act will not result in the government falling since it is not a money Bill.
A Seshan, on email
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