This will effectively put an end to the debate over the custody of regulator funds, being contested for now by the Insurance Regulatory and Development Authority (Irda). This is the law as we read it, North Block mandarins have asserted.
While Irda chairman N Rangachary on Wednesday reiterated his right to retain the money in a separate account, finance ministry officials insisted that the watchdog body would have to part with the funds.
Sebi being the only other regulator that retains with it the monies collected under various heads, the amendments proposed to the Sebi Act would include a provision relating to this aspect as well, they pointed out.
The bill to amend the Sebi Act could come this winter session itself, they indicated. It aims at empowering Sebi for search and seizure operations and at enhancing its penal authority.
Mr Rangachary argued that if funds accumulating with Irda were to be put into the public account, by the same logic all amounts flowing into the public sector should also be deposited there. He claimed that Irda would get hardly Rs 10-15 crore a year from insurers and intermediaries as licence or renewal fees. I am being penalised for operating on a tight budget, he remarked.
The ministry had in a July directive to Irda asked it to deposit its surpluses into the public account and withdraw annually a specified sum against its requirements.
The public fund holds money collected in the name of the government by various entities in a non-lapsable account. They only have to ask for more if they need it, a senior official clarified. However, Mr Rangachary seems wary of letting go of its funds, being familiar with the difficulties in prising out any money once given to the government.
He has been resisting the move for nearly two years now, especially since Sebi was not being asked to fall in line as well.
However, with the North Block line of action now clear, he may have little choice, ministry sources felt.