Financial Sector Legislative Reforms Commission to harmonise Financial Sector Regulations

The Indian government on 24 March 2011 constituted 11member Financial Sector Legislative Reforms Commission (FSLRC) to examine the means of oversight on regulators and their autonomy from the government. The 11-member commission will be headed by Retired Supreme Court Justice BN Srikrishna and includes other members former PFRDA Chairman D Swarup, former Chairman of Axis Bank PJ Nayak, PMEAC member M Govinda Rao, among others. The commission is scheduled to have its first meeting on 5 April 2011.

Plan for setting up the FSLRC commission was announced by Finance Minister Pranab Mukherjee in his Budget for 2010-11. The committee is expected to rewrite and harmonise financial sector legislations, rules and regulations.

The commission will examine the architecture of the legislative and regulatory system governing the financial sector in India and will look at the most appropriate means of oversight over regulators and their autonomy from the government.

It will be responsible for examining if legislation should mandate statement of principles of legislative intent behind every piece of subordinate legislation in order to make the purposive intent of the legislation clear and transparent to users of the law and to the Courts.

Also it will look at feasibility of public feedback for draft subordinate legislation being made mandatory, with exception for emergency measures. It will study the interplay of exchange controls under FEMA and FDI Policy with other regulatory regimes within the financial sector.
The commission will submit its report to the Finance Minister within 24 months of its formation.
There are over 60 Acts and multiple rules and regulations dealing with the financial sector and a number of them have become archaic.