Column : Towards better financial regulation
The commission has just released an approach paper available on its website (http://www.fslrc.org.in/files/fslrc_approach_paper.pdf). The paper outlines its strategy and the recommendations it is thinking of making in its report to be submitted by end March 2013. The approach emphasises the objectives of regulation, the rule-making process, and discusses a change in India’s financial regulatory architecture.
In the 2000s, through a number of government committee reports such as the Raghuram Rajan and the Percy Mistry reports which highlighted problems in the Indian financial sector, a slow consensus was seen to be developing in support of reforms. As India grows, the needs of the economy for finance increases. Households and firms, especially small firms, do not have access to finance. Until now, the approach in Indian finance has been to give permissions for some products or markets. The rest of the financial products and markets for which no explicit permission is given, are banned. This approach has restricted innovation in financial markets.
The modern approach to financial regulation, in many advanced economies such as Australia and Canada, which have undertaken financial
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