“Transparency and optimal selection criteria is key to efficient financial sector regulation”, Prof. Vijay Vyas, at CUTS State level consultation seminar on Indian Financial Code

Jaipur, November 15, 2014

Consumer Unity and Trust Society (CUTS) organised a state level consultation seminar on ‘Indian Financial Code’, in association with the National Institute for Public Finance and Policy (NIPFP), at Jaipur, on 15th November, 2014. Indian Financial Code is a product of the Financial Sector Legislative Reforms Commission (FSLRC), which was constituted by the Government of India to undertake a comprehensive review of financial sector legislations. FSLRC made seminal recommendations in the areas of financial architecture, consumer protection, prudential regulation, law making and review.

The seminar involved a round table discussion amongst sector experts on critical recommendations of the FSLRC. Prof. Vijay Vyas, Professor Emeritus, Institute of Development Studies, chaired the roundtable. While pointing out the need for transparency in law making and implementation, and the need for optimal selection criteria for individuals manning the regulator, he noted that the law must benefit the financially vulnerable population, and be development oriented.

M.S. Sahoo, Visiting Fellow, NIPFP, and Rajshekar Rao, Advocate, Supreme Court, highlighted the benefits of principled based approach, adopted by the FSLRC, such as, prevention of regulatory arbitrage and clarity in regulation. They also highlighted the accountability mechanisms and review provisions, drafted in the Code to further consumers’ interests.

S.R. Goyal, Former President, Institute of Chartered Accountants of India, noted that caution is must while adopting FSLRC recommendations and one must take into account ground realities. He emphasised on the need for undertaking impact assessment of proposed and existing legislations, and lauded CUTS initiatives in this regard. CUTS is implementing projects in energy and financial sectors, to facilitate adoption of impact assessment in India, with support from Asian Development Bank, and British High Commission, respectively.

Other participants in the roundtable included Vikas Rajvanshi, Managing Partner, Rajvanshi and Associates, and Sanjay Jhanwar, Managing Partner, Chir Amrit Associates, who pointed out the need to keep track of constant innovations in the financial sector. A lively question and answer session followed the roundtable discussion, with audience comprising of professionals, market participants, media and other stakeholders.

Udai S. Mehta, Director, CUTS, in his closing remarks, emphasising on the need of regulatory independence. He further noted that stakeholder consultation and data availability in public domain is a must, in order to undertake an effective impact assessment.

The roundtable discussion was preceded by presentations by NIPFP and CUTS on key recommendations of FSLRC and CUTS’ initiatives on impact assessment, respectively. A.K. Godika, Executive Director, Rajasthan Chamber of Commerce and Industry, also spoke at the opening session.