Government of India Volume I: Analysis and Recommendations

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EXECUTIVE SUMMARY States GDP as of today. Over these coming years, there will be substantial changes in the financial system. The technological change, and the financial products and processes which will come into play, cannot be envisaged today. The aspiration of the Commission is to draft a body of law that will stand the test of time. The Commission has hence focused on establishing sound financial regulatory agencies, which will continually reinterpret principles-based laws in the light of contemporary change, and draft subordinated legislation that serves the needs of the Indian economy. This subordinated legislation, coupled with the jurisprudence built up at the FSAT and the Supreme Court, will continually reflect the changing needs of the Indian economy. xxviii FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION
CHAPTER 1 Introduction 1.1. FSLRC and its Mandate The Ministry of Finance, Government of India, constituted the Commission 1 vide Resolution dated the 24 th March, 2011, ‘with a view to rewriting and cleaning up the financial sector laws to bring them in tune with the current requirements’. The Resolution, detailing the imposition and Terms of Reference (TOR) of the Commission, is in Annex 19.1. The TOR are quite broad and cover a gamut of issues related to the financial sector in India. Broadly, the Commission has been tasked with examining and reviewing the legislative and regulatory systems; the inter-play of jurisdictions of various regulators; the issues relating to conflict of interest of regulators; the manner of drafting and implementation of subordinate legislation; the criteria and terms of appointment of senior officials in the regulatory authorities and appellate systems of financial sector; clarifying the principles of legislative intent; the issues relating to independence and autonomy of regulators; re-statement and/or repeal of legislations on the basis of liberalisation and other developments in the last two decades; the issues on data privacy and protection of consumers of financial services; the role of information technology and effectiveness of delivery of financial services; the recommendations made by expert committees in the past; the issues relating to inter-state aspect of financial services infrastructure and any other related issues; and evaluating the raison d’etre of the several laws governing the financial sector, some of them as old as 140 years. Keeping them in context and fitting them to the broad framework of the economy’s future requirements has been a daunting task. The Commission was given a time-frame of twenty four months to complete this effort. The Commission was set up at a time when the global economy was recovering from the 2008 financial crisis. At the time, lessons from what went wrong and the possible options were being debated. These ideas and inputs were freshly available to the Commission. India escaped the crisis fairly unscathed; and therefore, the Commission did not have to work on regulatory structures and laws in a fire-fighting mode, which is not an appropriate way of building sustainable institutional structures. The Commission could, therefore, assimilate the lessons from the crisis, and at the same time, think and construct a model relevant to the Indian context in a calm and detached manner supported by quality research, extensive deliberations and detailed interaction with a host of experts and stake-holders. 1 The terms Commission and the Commission are used interchangeably in this report FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 1
Page 1: Government of India _______________
Page 5 and 6: Contents Acronyms . . . . . . . . .
Page 7: CONTENTS 12 Public debt management
Page 10 and 11: ACRONYMS FSAT Financial Sector Appe
Page 13 and 14: Acknowledgement When the Ministry o
Page 15: ACKNOWLEDGEMENT appreciate the effo
Page 18 and 19: EXECUTIVE SUMMARY rience till date.
Page 20 and 21: EXECUTIVE SUMMARY out many processe
Page 22 and 23: EXECUTIVE SUMMARY can issue regulat
Page 24 and 25: EXECUTIVE SUMMARY Alongside this, i
Page 26 and 27: EXECUTIVE SUMMARY to analyse one co
Page 28 and 29: Contracts, trading and market abuse
Page 30 and 31: 5. A new Financial Redressal Agency
Page 34 and 35: 1.2. Deliberations in the Commissio
Page 36 and 37: INTRODUCTION amendments frequently
Page 38 and 39: INTRODUCTION sectoral composition o
Page 40 and 41: INTRODUCTION The Commission has und
Page 43 and 44: CHAPTER 2 The tasks of financial la
Page 45 and 46: THE TASKS OF FINANCIAL LAW This is
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Page 49 and 50: THE TASKS OF FINANCIAL LAW 2.5. Own
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Page 53 and 54: CHAPTER 3 Structure of the regulato
Page 55 and 56: STRUCTURE OF THE REGULATOR Table of
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Page 63 and 64: FUNCTIONS AND POWERS OF THE REGULAT
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Page 76 and 77: CONSUMER PROTECTION The consumer pr
Page 78 and 79: Table of Recommendations 5.4 Princi
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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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14.2. Problems of the present arran
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FINANCIAL REGULATORY ARCHITECTURE T
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FINANCIAL REGULATORY ARCHITECTURE w
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TRANSITION ISSUES On the functional
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TRANSITION ISSUES service providers
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SUMMARY OF RECOMMENDATIONS NOT EMBE
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CHAPTER 17 Conclusion Financial eco
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18.2. Note of dissent by K.J. Udesh
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18.3. Note of dissent by P.J. Nayak
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NOTES OF DISSENT A second difficult
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NOTES OF DISSENT 6. The present arr
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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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