Finance Sector Legislative Reforms Commission (FSLRC) recently submitted a draft Indian Financial Code Bill which contains 450 clauses and six schedules.
The code was submitted to give effect to its recommendations on the financial architecture of the country.
Among various recommendations of the panel, the prominent one is the setting up of a Unified Financial Agency (UFA) by merging several regulators such as Sebi, Irda.
Under the proposed regulatory architecture, Securities and Exchange Board of India (Sebi), Forward Markets Commission (FMC), Insurance Regulatory and Development Authority (Irda) and Pension Fund Regulatory and Development Authority (PFRDA) would be merged into a UFA.
The commission also recommended that the role of Reserve Bank of India (RBI) be restricted to regulating banks and managing monetary policy.
The 10-member commission, headed by former Justice BN Srikrisha, said that the RBI should govern only outward capital flows and be stripped of its power to control Non-Banking Finance Companies (NBFCs). The task of monitoring inward flow be left to the government.
However, four members of the commission opposed the recommendation and said they wanted RBI to be the sole regulator of foreign capital flows and also of the NBFCs. The commission also suggested that SBI and LIC be brought under the purview of the Companies Act.