The ongoing spat between the government and the financial regulatory bodies throws into limelight a lot of serious issues. The latest mandate assigning financial development powers on the FSDC (Financial Stability and Development Council) has not gone down well with the RBI and SEBI, which feel that it is an encroachment on their autonomy. The reasoning given by a government official is that the current regulatory bodies are inflexible when it comes to growth. A really important point to be considered however is that it was the same "inflexibility" that helped avert a disaster during the global financial meltdown. If our banking and regulatory systems weren't so strong, then even we would have had exotic instruments floating about in our economy, sub prime loans and all the nonsense that has severely retarded the growth rate of a lot of economies world wide.
And to call the regulatory bodies inflexible is unfair. They have introduced reforms as and when were needed. Our primary and secondary market development is testimony to the same. Our banking system is seriously making inroads on the issue of rural inclusion. Recent issues involving MFIs , MFs and insurance providers, though disruptive in the short term on the growth of these institutions, are concrete steps towards better regulation. That such problems have come to the fore is itself a mark of an evolving regulatory system. For example: With the IRDA-SEBI spat, ambiguities regarding the governing principles of these bodies and the governed institutions are being addressed, something which is needed in an economy which is touted to grow at 9% this fiscal year.
Such oversight comes with experience and our regulatory bodies have been around long enough for intelligent functioning. So the accusation of inflexibility is an unfounded one. The government should learn to make more responsible statements.
And to call the regulatory bodies inflexible is unfair. They have introduced reforms as and when were needed. Our primary and secondary market development is testimony to the same. Our banking system is seriously making inroads on the issue of rural inclusion. Recent issues involving MFIs , MFs and insurance providers, though disruptive in the short term on the growth of these institutions, are concrete steps towards better regulation. That such problems have come to the fore is itself a mark of an evolving regulatory system. For example: With the IRDA-SEBI spat, ambiguities regarding the governing principles of these bodies and the governed institutions are being addressed, something which is needed in an economy which is touted to grow at 9% this fiscal year.
Such oversight comes with experience and our regulatory bodies have been around long enough for intelligent functioning. So the accusation of inflexibility is an unfounded one. The government should learn to make more responsible statements.
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