Government of India Volume I: Analysis and Recommendations

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3. Insurance Laws Amendment Bill, 2008 4. Life Insurance Corporation Act, 1956 5. Life Insurance Corporation (Amendment) Bill, 2009 6. General Insurance Business (Nationalisation) Act, 1972 7. Marine Insurance Act, 1963 8. Motor Vehicles Act, 1988 9. The Actuaries Act, 2006 10. Employees’ State Insurance Act, 1948 11. Companies Act, 1956 (to a limited extent) 12. Indian Contract Act, 1872 (to a limited extent) 13. The Pension Fund Regulatory and Development Authority Bill, 2011 ANNEXES 14. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (Employees’ Provident Fund Scheme, 1952, Employees’ Pension Scheme, 1995, Employees’ Deposit-Linked Insurance Scheme, 1976) 15. Income Tax Act, 1961 (to the extent relevant for recognised provident and superannuation funds) 16. Public Provident Fund Act, 1968 17. Government Savings Bank Act, 1873 18. Government Savings Certificates Act, 1959 19.7. Working Group on payments 19.7.1. Composition Dr. P.J. Nayak - Chairman Shri Ranjit Tinaikar - Member Shri Uttam Nayak - Member Shri Bharat Poddar - Member Shri A.P. Singh - Member Shri Abhishek Sinha - Member 19.7.2. Terms of reference 1. To identify what are the systemic risks to the financial system and to the real economy from payment systems. Payment systems can be systemically important, partly because shocks can originate within them, resulting in operational risks, but also because they can act as channels for propagating shocks originating outside their operations, through credit and liquidity markets. An understanding of the potential systemic credit, liquidity and operational risks in payment systems is thus required, so that criteria for identifying systemically important payment participants and systemically important payments systems can be formulated. Finally, to assess whether there are risks to financial stability arising from encouraging competition and innovation in payments. 2. To evaluate whether the regulatory system should cover all payment systems without exception, or instead merely those which are systemically important. Alternatively, to examine whether there should be a separate regulator for retail and smallvalue payment systems as compared to systemically important payment systems. 174 FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION
ANNEXES 3. As shocks can spread through payment systems to other participants and lead to their bankruptcy, to examine the design of a uniform and quick process for handling payment-induced bankruptcy. 4. To review whether independent payment systems should be encouraged, not linked to payment participants, thereby minimising moral hazard through conflicts of interest, and encouraging technology infusion at a faster pace. This would in turn require a review of whether payments should be viewed as an offshoot of banking, or as a distinct industry in its own right. It would also require assessing whether “banks being special" militates against having independent payment systems. To assess whether existing legislation is adequately supportive of the absorption of fast-changing payments technologies. 5. To review whether RBI should remain the regulator of payment systems or whether instead a regulator independent of RBI should be set up. This involves identifying whether there are conflicts of interest and moral hazard, as also whether adequate domain knowledge gets continually upgraded, in the present regulatory structure. 6. To ensure compatibility with the recommendations of the FATF. 7. To suggest regulation to promote transparency, security, efficiency and certainty of payments; and to ensure that regulation is agnostic to ownership structures of the regulated, necessitating treating regulated entities in the public and private sectors on par. To also suggest constructive and creative ways of enforcement of regulations. 8. To develop a quick and clear appeals process when there is conflict, equally fair to both disputants, especially when one of them is the regulator. To frame dynamic laws for penalties and review the stringency of current laws. 9. To promote financial inclusion following the ideals proposed in various reports such as the ’Report of the Inter-Ministerial Group: Framework for delivery of Basic Financial Services Using Mobile Phones’; ‘From Exclusion to Inclusion with Micropayments’; and Unique Identification Authority of India (UIDAI). 10. Any other matter the Working Group may consider relevant. 19.7.3. Recommendations 1. The Payments Regulator should permit self-registration of payment system providers, including through online modalities. 2. The Payments Regulator should permit existing non-payment businesses to extend their business models to cover payments, in order that customer coverage could thereby expand. 3. Empower the payments regulator to ensure that access to infrastructure services is open and free of restrictive practices. 4. In order to foster financial inclusion within payments, the Payments Regulator should encourage the concept that certain categories of small-value payments could dispense with Know Your Customer (KYC) requirements for the entity making payments. Further, the categories of such payments should be clearly identified. 5. The Payments Regulator should permit, and indeed encourage, electronic KYC authentication as a full substitute for paper-based KYC authentication. 6. Regulation must maintain a level playing field within the payments industry between the public sector and the private sector, and between bank and non-bank players. It would need to be neutral to the ownership and category structures of the regulated entity, in the absence of which innovation within the payments industry is liable to be stifled. FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 175
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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
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MICRO-PRUDENTIAL REGULATION let tha
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MICRO-PRUDENTIAL REGULATION Table o
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MICRO-PRUDENTIAL REGULATION PRINCIP
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MICRO-PRUDENTIAL REGULATION the oth
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RESOLUTION payment systems. The cor
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RESOLUTION Commensurately, the corp
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Table of Recommendations 7.3 Intera
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Table of Recommendations 7.5 Powers
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Table of Recommendations 7.7 Fundin
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CHAPTER 8 Capital controls Capital
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CAPITAL CONTROLS 2. Absence of judi
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CAPITAL CONTROLS Table of Recommend
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CAPITAL CONTROLS Table of Recommend
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Table of Recommendations 9.1 Object
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Table of Recommendations 9.3 Establ
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SYSTEMIC RISK filings by financial
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SYSTEMIC RISK Table of Recommendati
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egulatory agencies. In such a situa
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FINANCIAL INCLUSION AND MARKET DEVE
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FINANCIAL INCLUSION AND MARKET DEVE
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Table of Recommendations 11.1 Objec
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Table of Recommendations 11.2 The m
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Table of Recommendations 11.3 Board
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CHAPTER 12 Public debt management 1
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PUBLIC DEBT MANAGEMENT of the publi
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PUBLIC DEBT MANAGEMENT State Govern
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PUBLIC DEBT MANAGEMENT Table of Rec
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CHAPTER 13 Foundations of contracts
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FOUNDATIONS OF CONTRACTS AND PROPER
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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
Page 191 and 192: ANNEXES 19.2. List of consultants,
Page 193 and 194: ANNEXES * Did not participate in th
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Page 201 and 202: ANNEXES 19. Role of surveyors: (a)
Page 203 and 204: ANNEXES 6. The law must provide for
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Page 209 and 210: ANNEXES 19.8.2. Terms of Reference
Page 211 and 212: ANNEXES (d) The Board of the target
Page 213 and 214: ANNEXES 2. The PDMA should adopt a
Page 215 and 216: ANNEXES 3. On the issue of co-opera
Page 217 and 218: ANNEXES 14. Regulators must look at
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Page 221 and 222: ANNEXES (b) Efficiency of DRT: Suit
Page 223 and 224: ANNEXES (c) Pledged shares and exem
Page 225 and 226: ANNEXES 19.11. Interactions by the
Page 227 and 228: ANNEXES 19.13. Submissions to FSLRC
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Government of India Volume I: Analysis and Recommendations

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