A high-powered government panel has recommended regulation of some financial activities of the government agencies, presently falling outside the sphere of financial regulation.

This includes fund management services offered by EPFO, other statutory provident funds, insurance services of postal life insurance and ESIC and various small savings products issued by the government. The Financial Sector Legislative Reforms Commission (FSLRC) in its final report which was released by the government on Thursday said this requires examination of the legislative foundations of these programmes and clarification of regulatory jurisdiction.

The report also sought regulation of co-operatives created under laws made by state governments. Since the subject of co-operative societies falls within the legislative domain of states, the commission recommended using Article 252 of the Constitution to ensure states accept the authority of Parliament to legislate on matters relating to the regulation and supervision of co-operative societies carrying on financial services.

As reported earlier, the other recommendations of the panel included diminishing the role of RBI to be just the monetary authority and supervisor of banking and payments. The panel wanted a new Unified Financial Agency deriving powers from an omnibus Indian Financial Code (IFC), which would replace most of the existing over 60 financial laws dating back several decades, to enjoy oversight powers over the rest of the financial sector, including the commodity derivatives market. The proposed unified regulator would merge the functions of Sebi, Irda, PFRDA, the Forward Markets Commission and some functions of RBI.

The panel also mooted a new unified Financial Redress Agency (FRA) to serve aggrieved consumers across all sectors and featuring a low-cost process through which the complaint of the consumer against the financial firm would be heard, and remedies awarded.

The suggestions, it said, could be implemented in two years after IFC is passed by Parliament. The commission also asked the Centre to establish a focused project team within the finance ministry to manage the overall transition process.

Besides, it has recommended a unified Financial Sector Appellate Tribunal (FSAT) by subsuming the existing Securities Appellate Tribunal to hear appeals against RBI for its regulatory functions, the unified financial agency, decisions of the FRA and some elements of the work of the resolution corporation.

?The Commission endeavours to draft a body of law that will stand the test of time,? the report said. It added the subordinated legislation, coupled with the jurisprudence built up at the FSAT and the Supreme Court, ?will continually reflect the changing needs of the Indian economy, and serve the country well in coming decades.?

In a report submitted to the government last week, FSLRC headed by justice BN Srikrishna has not deviated much from the panel?s approach paper released on October 1 last year.

The report said the present arrangement has gaps for which no regulator is in charge ? such as the diverse kinds of ponzi schemes that periodically surface in India, which are not regulated by any of the existing agencies. Besides, there are overlaps where conflicts between regulators has consumed the energy of top economic policy makers and held back market development.

Tightening Control

* Draft ?Indian Financial Code? to replace most of the 60 existing financial laws

* RBI to perform functions including monetary policy, regulation and supervision of banking and of payment systems

* Unified Financial Agency to merge the functions of Sebi, Irda, PFRDA, Forward Markets Commission and some power of RBI

* Unified Financial Redress Agency to serve aggrieved consumers acrossall sectors

* Financial Sector Appellate Tribunal to hear appeals against RBI for regulatory functions, unified financial agency, decisions of FRAand some elements of the work of the resolution corporation

* Resolution Corporation to subsume DICGC and work across the financial system

* Public Debt Management Agency to be an independent debt management office

* Financial Stability and Development Council to become a statutory agency and have role on systemic risk and development

* Panel wants regulation of EPFO?s fund management services and other statutory provident funds, insurance services of postal life insurance and ESIC & various small savings products of the govt

* It also sought regulation of co-operatives created under laws made by state governments