Unconfirmed reports indicate that some of the key clauses of the Justice BN Srikrishna Commission report on revamping financial sector laws were opposed by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi).
Both RBI and Sebi are learnt to have discussed some of the clauses in the report at a recent meeting of the Financial Stability and Development Council (FSDC), which was Chaired by Finance Minister P Chidambaram.
Justice BN Srikrishna headed the Financial Sector Legislative Reforms Commission (FSLRC), which submitted its report on revamping financial sector laws some months ago.
The report said it was important to put in place a mechanism that allows regulated entities to question regulations if it exceeds the mandate given to a regulator and if due process has not been followed.
RBI and Sebi oppose this provision arguing that there would be major uncertainties in policy making if all rules passed by them were to be challenged.
Both RBI and Sebi opposed recommendations such as allowing a review of all regulations by financial firms, intermediaries or others by a new body — the Financial Sector Appellate Tribunal, or FSAT.
In the current regulatory regime, a judicial review is limited to executive orders issued by the regulators and excludes regulations which are approved by the board of the supervisors.