Government of India Volume I: Analysis and Recommendations

TRANSITION ISSUES
On the functional side, certain preparatory steps can be taken. The Commission recommends
the creation of an “Interim Co-ordination Council” of existing regulators, namely, SEBI, FMC, PFRDA
and IRDA, that are to be merged to create the UFA.
The following are the recommendations of the Commission on how the implementation
of each of the agency may take place:
1. UFA
2. RBI
(a) On acceptance: An interim Board, without any powers, should be set up using
an executive order. This Board will evaluate existing regulations and prepare
for the eventual setting up of the UFA. Further, a co-ordination committee
will be set up between all regulators that will be subsumed under UFA.
(b) On passage of draft Code: The Board will be appointed as the official board
under the law. All financial sector regulators other than RBI shall be subsumed
under UFA. All the subsumed regulators will change letter heads and continue
to function. Employees will be transferred. The Board will begin consultation
on new regulations. Existing regulations will transition to new regulations over
time.
(c) Law + 2 years: Regulations existing before the passage of the draft Code will
lapse. By this time, the Board must have replaced the entire subsidiary legislation
and consolidated all subsumed agencies.
(a) On acceptance: The RBI Board will evaluate existing regulations and prepare
for the eventual transformation of the RBI. The Board will start taking steps to
shift out functions of the PDMA and plan the establishment of the MPC process.
(b) On passage of draft Code: The Board will need to be reconstituted reflecting
the provisions of the law. The Board will begin consultation on new regulations.
Existing regulations will transition to new regulations over time. PDMA
and MPC will come into existence.
(c) Law + 2 years: Regulations existing before the passage of draft Code will
lapse. By this time, the Board must have replaced the entire subsidiary legislation.
3. Resolution Corporation
4. FRA
(a) On acceptance: An interim Board, without any powers, should be set up using
an executive order. This Board will evaluate existing rules and prepare for
the eventual setting up of the Resolution Corporation.
(b) On passage of draft Code: The Board will be appointed as the official board
under the law. DICGC will cease to exist and its obligations will be subsumed
by the Resolution Corporation till the new rules are put in place. Employees
will be transferred or reverted. The Board will begin consultation on new regulations.
Existing regulations will transition to the new regulations over time.
(c) Law + 2 years: By this time, the Resolution Corporation will be fully functional
and the new set of rules will be in place.
(a) On acceptance: An interim Board, without any powers, should be set up using
an executive order. This Board will evaluate existing rules and prepare for
the eventual setting up of the FRA.
(b) On passage of draft Code: The Board will be appointed as the official board
under the law. Existing rules and ombudsmen will transition to new rules and
agency over time.
138 FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION