Emphasising on the importance of accountability of regulatory institutions, Sebi chairman UK Sinha today called for a stronger Parliamentary oversight for regulators.
Delivering the JRD Tata Memorial Lecture here, the Sebi chief also said that making regulators accountable to the government would “impinge upon their independence”.
“In the Indian context, a further strengthening of the mechanism of Parliamentary oversight is required,” Sinha said.
He said it is doubtful whether the hundreds of regulations are ever scrutinised by the parliamentary committee or whether the activities are sufficiently under the radar of Parliament.
Parliamentary committees should be empowered to have a sufficient number of experts to aid and advise them for a structured working of the regulators, he added.
Generally, Parliament laws deal with basic principles and leave specific details to regulators for them to frame subordinate legislation.
“The global financial crisis has further reinforced the need for scrutiny of the financial regulators about their perceived inactions and failures,” the Sebi chief said.
Noting that demand for a structured assessment of regulatory institutions has been growing, Sinha said what is a sound and workable mechanism is still evolving.
“In the episodes of ponzi schemes and unauthorised money collection schemes which grew in this decade in certain parts of the country, the need was felt to further empower the regulator,” he said.
Touching upon the need to have clarity about a regulator’s role and episodes of “mass misconduct”, Sinha said there is a hesitation in delegating “state powers to an arm’s length independent agency”.
“To what extent protection of public interest can be delegated to FSSAI or to anti-competition or telecom regulatory authority are often matters of intense debate where requirements of interest of individuals have to be matched with the interests of letting firms function,” he noted.