28 February 2010

Revision of financial regulations

The finance minister proposes setting up a 'Financial Sector Legislative Reforms Commission' with the following mandate:

101. Most of our legislations governing the financial sector are very old. Large number of amendments to these Acts made at different points of time has also increased ambiguity and complexity. The Government proposes to set up a Financial Sector Legislative Reforms Commission to rewrite and clean up the financial sector laws to bring them in line with the requirements of the sector.

This is really good news. Regulations and regulators have become so fragmented and sectors are regulated with different regimes though the products are similar. Different regulators have different powers though they perform identical functions of regulations. Finally, 1950s type suspision of 'speculation' as a horrible thing to be clamped down, ought to give way to a modern set of laws (the ban on OTC forwards on Indian securities of public limited companies needs to give way).

This is a huge task - to clean up the whole regime - but an idea whose time has come.

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