Japan would like India to clarify the relationship between the newly set up Financial Sector Legislative Reforms Commission (FSLRC), the Financial Stability and Development Council (FSDC) and existing financial authorities (Ministry of Finance, Reserve Bank of India, etc.), including the structure and functions of those new organizations.
Reply: Through a resolution dated 24 March 2011, the Government set up the Financial Sector Legislative Reforms Commission (FSLRC) with a view to rewriting and harmonizing the financial sector legislation, rules and regulations to address the contemporaneous requirements of the financial sector.
The Commission will make its recommendations within 24 months of the date of the resolution. It is chaired by Supreme Court Justice (Retd.) B. N. Srikrishna, and has ten members with expertise in the fields of finance, economics, law and other relevant fields.
The FSLRC can call for such information and take such evidence as it may consider necessary from various sources including Ministries and Departments of the Government of India and State Governments. The Commission will also engage with the inter regulatory body the Financial Stability and Development Council (FSDC) as a part of this exercise.
The apex level FSDC was set up by the Government on 30 December 2010 with a view to strengthen and institutionalize the mechanism for maintaining financial stability and enhancing inter regulatory coordination. The Chairman of the Council is the Finance Minister of India and its members include:
Financial sector regulatory organizations: the heads of the financial sector regulatory authorities: Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory Development Authority (IRDA), Pension Funds Regulatory Development Authority (PFRDA);
Ministry of Finance: Finance Secretary and/or Secretary, Department of Economic Affairs (DEA); Secretary, Department of Financial Services; and the Chief Economic Adviser.
This Council will monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates. It will address inter regulatory coordination issues and thus spur financial sector development. It will also focus on financial literacy and financial inclusion. A sub committee of FSDC has also been set up under the chairmanship of Governor, RBI.
