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Financial sector regulators will soon make amendments to sector-specific rules to ensure consistency and issue regulations to protect the personal information of customers. However, the proposal to have a unified regulator will not see the light of day until a new government is formed.
Regulators, including the Securities and Exchange Board of India, Forward Markets Commission, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority, will start implementing the Indian Financial Code that seeks to harmonise standards and processes across financial the sector.
It is learnt the UPA-II government wants the regulators to start working in this direction immediately. The regulators have also agreed to bring out uniform regulations and do not see much of a problem in doing so. This means the same procedure will be followed by all regulators in various areas such as consumer protection, transparency, approvals, investigation and penalty. (INDIAN FINANCIAL CODE: HOW REGULATORS WILL STANDARDISE PROCESSES)
Sebi Chairman U K Sinha on Saturday said the legislative part of the Code cannot be taken up before the formation of the next government, but the non-legislative part can be implemented as some of the recommendations are more about procedures and principles.
“Any regulation a regulator is making will have to be done in a transparent and consultative manner. Sebi has been following it for the last several years. It is keen on implementing the basic principles of the recommendations by the Financial Stability Development Council,” Sinha said, adding there was no doubt about its practicality.
The finance ministry has released a guidance handbook for the regulators to implement the non-legislative recommendations of the Financial Sector Legislative Reforms Commission. The ministry will track the implementation of these and continue to provide guidance to regulators on the implementation process.
The regulators will take into account the issues in their respective regulated sectors, and specify, by regulations, the processes to be followed in providing redress to customer grievances. They will also create a separate category of retail investors to ensure better protection. Regulators do not carry out systematic cost-benefit analysis before framing regulations. They have been asked to follow international best practices in regulation-making in identifying costs and benefits of each action. Also, comments will be sought from the public for all regulations, after the draft regulations have been approved by the board of the regulator.
