Government of India Volume I: Analysis and Recommendations

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Table of Recommendations 11.3 Board of the central bank MONETARY POLICY 1. The board of the central bank would have up to 12 members; the number of executive members should not exceed 50 percent. 2. One of the executive members will be the Chairperson of the Bank (who would be the chair of the board). 3. One executive member will function as the administrative law member. 4. There would also be nominee members of the Central Government. 5. In the exercise of micro-prudential and consumer protection functions, all regulations would be issued by the board. 6. The board would oversee the functions of the central bank and have overall control of its organisation structure. It would continually work towards refashioning the organisation so as to best achieve its goals. 7. The board would be assisted by two advisory councils, in the fields of banking and payments. Table of Recommendations 11.4 Functioning of the advisory councils for consumer protection and micro-prudential regulation in banking and payments 1. In the regulation-making process, all information associated with a proposed regulation would be placed before the advisory councils, which would draft a memo with its views on the proposed regulation. This memo would be presented to the board of the central bank. 2. Each advisory council would author a report every year, taking stock of progress in their respective fields and making specific recommendations for reform. The reports would be presented to the board of the central bank for decisions and be released to the public. 3. Each council would periodically originate memos on current policy issues that would be presented to the central bank board for decisions and released to the public. While the board would not be involved in monetary policy decisions, it would, however, watch the extent to which the objectives of monetary policy (as formulated by the Central Government) are being achieved. The structure of the board, proposed by the Commission, reflects these three functions, and is shown in Table 11.3. 11.6.2. Advisory councils for banking and payments The provisions on regulatory governance in the draft Code envisioned by the Commission involves a well-structured regulation-making process. When this process is completed, each proposed regulation would contain a draft regulation, the associated cost-benefit analysis, the comments received from the public, and the substantive response to each of them. Such information would be placed before the advisory councils and they would issue a statement containing their opinion on draft regulations. In addition, the two advisory councils would publish a report each year, highlighting new developments and areas of concern in their respective fields. The functioning of the two advisory councils for banking and payments is summarised in Table 11.4. 11.7. Temporary Liquidity Assistance The central bank would operate mechanisms through which liquidity assistance is potentially available to financial service providers, against adequate collateral, to tide over temporary liquidity shortages, or, technical payment problems that may hamper smooth functioning of the financial system. This would involve a distinction between ‘standing facilities’, which are oriented towards resolving problems in payments systems, and ‘emergency lending assistance’, which are somewhat longer term. These processes would involve mechanisms for co-ordination between the central bank and other regulatory agencies. The central bank would issue regulations to determine rules of collateral and the overall rules governing the lending. Since this facility is intended to provide short-term liquidity support to financial service providers and not meant to be used as a replacement for funding day-to-day oper- 108 FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION
MONETARY POLICY ations, the price structure should be such that the borrowing entity would prefer to first seek regular funding from the market. The identity of the borrowing entity would be revealed to the public only after an appropriate lag, while the total amount lent through this facility should be part of the daily reporting requirements. FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 109
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Government of India _______________
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Contents Acronyms . . . . . . . . .
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CONTENTS 12 Public debt management
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ACRONYMS FSAT Financial Sector Appe
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Acknowledgement When the Ministry o
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ACKNOWLEDGEMENT appreciate the effo
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EXECUTIVE SUMMARY rience till date.
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EXECUTIVE SUMMARY out many processe
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EXECUTIVE SUMMARY can issue regulat
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EXECUTIVE SUMMARY Alongside this, i
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EXECUTIVE SUMMARY to analyse one co
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Contracts, trading and market abuse
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5. A new Financial Redressal Agency
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EXECUTIVE SUMMARY States GDP as of
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1.2. Deliberations in the Commissio
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INTRODUCTION amendments frequently
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INTRODUCTION sectoral composition o
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INTRODUCTION The Commission has und
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CHAPTER 2 The tasks of financial la
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THE TASKS OF FINANCIAL LAW This is
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THE TASKS OF FINANCIAL LAW ◮ “i
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THE TASKS OF FINANCIAL LAW 2.5. Own
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THE TASKS OF FINANCIAL LAW desirabl
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CHAPTER 3 Structure of the regulato
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STRUCTURE OF THE REGULATOR Table of
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CHAPTER 4 Functions and powers of t
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FUNCTIONS AND POWERS OF THE REGULAT
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CONSUMER PROTECTION The consumer pr
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Table of Recommendations 5.4 Princi
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CONSUMER PROTECTION using or disclo
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CONSUMER PROTECTION providers. The
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CONSUMER PROTECTION Table of Recomm
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CHAPTER 6 Micro-prudential regulati
Page 89 and 90: MICRO-PRUDENTIAL REGULATION let tha
Page 91 and 92: MICRO-PRUDENTIAL REGULATION Table o
Page 97 and 98: MICRO-PRUDENTIAL REGULATION PRINCIP
Page 99: MICRO-PRUDENTIAL REGULATION the oth
Page 102 and 103: RESOLUTION payment systems. The cor
Page 104 and 105: RESOLUTION Commensurately, the corp
Page 106 and 107: Table of Recommendations 7.3 Intera
Page 108 and 109: Table of Recommendations 7.5 Powers
Page 110 and 111: Table of Recommendations 7.7 Fundin
Page 113 and 114: CHAPTER 8 Capital controls Capital
Page 115 and 116: CAPITAL CONTROLS 2. Absence of judi
Page 117 and 118: CAPITAL CONTROLS Table of Recommend
Page 119: CAPITAL CONTROLS Table of Recommend
Page 122 and 123: Table of Recommendations 9.1 Object
Page 124 and 125: Table of Recommendations 9.3 Establ
Page 126 and 127: SYSTEMIC RISK filings by financial
Page 128 and 129: SYSTEMIC RISK Table of Recommendati
Page 130 and 131: egulatory agencies. In such a situa
Page 132 and 133: FINANCIAL INCLUSION AND MARKET DEVE
Page 134 and 135: FINANCIAL INCLUSION AND MARKET DEVE
Page 136 and 137: Table of Recommendations 11.1 Objec
Page 138 and 139: Table of Recommendations 11.2 The m
Page 143 and 144: CHAPTER 12 Public debt management 1
Page 145 and 146: PUBLIC DEBT MANAGEMENT of the publi
Page 147 and 148: PUBLIC DEBT MANAGEMENT State Govern
Page 149 and 150: PUBLIC DEBT MANAGEMENT Table of Rec
Page 151 and 152: CHAPTER 13 Foundations of contracts
Page 153 and 154: FOUNDATIONS OF CONTRACTS AND PROPER
Page 161: FOUNDATIONS OF CONTRACTS AND PROPER
Page 164 and 165: 14.2. Problems of the present arran
Page 166 and 167: FINANCIAL REGULATORY ARCHITECTURE T
Page 168 and 169: FINANCIAL REGULATORY ARCHITECTURE w
Page 170 and 171: TRANSITION ISSUES On the functional
Page 172 and 173: TRANSITION ISSUES service providers
Page 174 and 175: SUMMARY OF RECOMMENDATIONS NOT EMBE
Page 177: CHAPTER 17 Conclusion Financial eco
Page 180 and 181: 18.2. Note of dissent by K.J. Udesh
Page 182 and 183: 18.3. Note of dissent by P.J. Nayak
Page 184 and 185: NOTES OF DISSENT A second difficult
Page 186 and 187: NOTES OF DISSENT 6. The present arr
Page 189 and 190: CHAPTER 19 Annexes 19.1. Formation
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ANNEXES 19.2. List of consultants,
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ANNEXES * Did not participate in th
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ANNEXES 19.5. Interactions with aut
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ANNEXES (c) Examine whether informa
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ANNEXES 2. General development of m
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ANNEXES 19. Role of surveyors: (a)
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ANNEXES 6. The law must provide for
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ANNEXES 31. Resolution of insurance
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ANNEXES 3. As shocks can spread thr
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ANNEXES 19.8.2. Terms of Reference
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ANNEXES (d) The Board of the target
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ANNEXES 2. The PDMA should adopt a
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ANNEXES 3. On the issue of co-opera
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ANNEXES 14. Regulators must look at
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ANNEXES 31. The WG recommends the m
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ANNEXES (b) Efficiency of DRT: Suit
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ANNEXES (c) Pledged shares and exem
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ANNEXES 19.11. Interactions by the
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ANNEXES 19.13. Submissions to FSLRC
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Government of India Volume I: Analysis and Recommendations

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