Say no to super-regulator
Apropos of RBI Governor Raghuram Rajan's speech at the State Bank Banking and Economic Conclave, carried in your paper (“FSLRC’s idealism”, FE, June 18), Rajan has rightly pointed out that shifting the regulation of bond trading to the FSLRC-proposed Unified Financial Agency would severely hamper the development of the government bond-market. Already the consolidated surveillance has seen misses in controlling the the financial market. Look at the Satyam Computers and NSEL fiascos, which are the prominent examples of the inability of the sectoral regulators to prevent corporate fraud despite claiming to have tight control. Given how the NSEL scam, the magnitude of which was a mind-blowing R5,000 crore, faded with just a few arrests and Satyam fiasco slipped out of public memory, creating a new agency such as the Unified Financial Agency and giving it a wide spectrum of control as proposed by the FSLRC is fraught with risk. If it fails to keep track of the bond market, it will fail miserably even before it takes off. So, the government should not accept those recommendations of the FSLRC that promote a culture of multi-layered supervision.