Srikrishna to address industry concerns about Indian Financial Code on ICSI platform

Written by Ashish Sinha | New Delhi | Updated: Apr 23 2013, 07:51am hrs
In order to bring in more clarity on the proposed Indian Financial Code (IFC) recommended by the Financial Sector Legislative Reforms Commission (FSLRC), the stakeholders, including the insurance regulator, have demanded further consultations and debate.

Responding to the industry request, now the Institute of Company Secretaries of India (ICSI) has taken

it upon itself to organise nationwide debate and roadshows on IFC in which FSLRC head Justice (retd) BN Srikrishna will provide clarity on some of the issues raised by the stakeholders.

The next debate will be in Mumbai later this week, said ICSI president SN Anantha Subramanian.

The FSLRC in its recommendations has batted for a new unified agency for the financial sector after merging the existing regulators Securities and Exchange Board of India, the Forward Markets Commission, Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority (PFRDA).

Also, if the government were to accept the commissions report in entirety, it may lead to repeal of several crucial legislation such as the Sebi Act, IRDA Act and LIC Act.

Subramanian said that ICSI has chosen to associate with the FSLRC committee. "It is first of a kind initiative by the ICSI. More debates in other cities are on the anvil," Subramanian said.

Taking part in the first discussion held in Hyderabad on Saturday, TS Vijayan, chairman, Irda, said last week that more consultation and debate are mandatory to remove any ambiguity in the various recommendations of the FSLRC, such as principle-based regulation and modalities on capital flows. Vijayan said that if the financial code comes into force, Hyderabad will lose its only regulator and Irda would not be there. Vijayan recently took over as Irda chief.

CKG Nair, secretary, FSLRC and economic advisor, department of economic affairs, said at the event that there must be a systematic approach and one must build a strong principle-agent relationship to increase investor confidence. "The FSLRCs report is not meant for todays India, it was for tomorrows, as the economy is expected to touch $15 trillion by 2030 from the current $2 trillion," said Nair.

The commission, which had a two-year term, has proposed a sector-neutral Indian Financial Code to replace multiple and old financial sector laws, splitting the regulation between the Reserve Bank of India and a new Unified Financial Agency that will oversee the remaining financial sector.

According to the report, which was submitted last month, RBI will be divested of its powers over management of public debt, which is currently one of its subsidiary functions. The Debt Management Bill, likely to be considered by the Cabinet, proposes a separate debt management office to be attached to the finance ministry. The report also recommends creation of a public debt management office, a recommendation that was criticised by RBI when the draft report was issued for consultation.