The Union Govt may introduce draft Financial Code in winter session of Parliament

Highlights:

  • The Union Government will be seeking its approval for the proposed Indian Financial Code in the coming winter session of the parliament.
  • It would replace 60-odd archaic laws to herald a regime of principle-based, as opposed to sector-specific  regulation.
  • It became one of the biggest generational shake-up in the financial sector.
  • The draft Code is now being finetuned on the basis of comments of stakeholders and would be put up again in the public domain around mid-2015 before the final version is placed before the Parliament in November-December.
  • The Financial Sector Legislative Reforms Commission (FSLRC) chaired by Justice BN Srikrishna was set up in March 2011.
  • Its aim was to rewrite the financial sector laws to harmonise them with the new requirements.
  • The report was submitted to the finance ministry in March 2013.
  • It has recommended revamping the legislative framework of the financial sector regulatory architecture, restructuring of existing regulatory bodies and creating new agencies wherever required.
  • It also made a slew of non-legislative recommendations to enhance consumer protection and greater transparency in the functioning of financial sector regulators.
  • The proposed shifting of the government bond market to Sebi and setting up of PDMA to manage government debt has created some discomfort for the RBI.
  • The draft Code seeks to move away from the current sector-wise regulation to a system where the RBI would deal with monetary policy and regulate banking and payment system while a Unified Financial Agency subsumes existing regulators - SEBI, IRDA, PFRDA and FMC - to regulate the rest of the financial markets.
  • Along with the proposed implementation of the uniform Goods and Sevices Tax from April next year.
  • India came in 142 in World Bank’s latest ease of doing business ranking of 189 countries.
  • Move to replace archaic laws -Action taken by the government on FSLRC recommendations
  • The draft Indian Financial Code finetuned, likely in the winter session of Parliament
  • A task force set up to upgrade existing Securities Appellate
  • Tribunal to the Financial Sector Appellate Tribunal
  • Task forces set up to establish new agencies such as Resolution Corporation,  Public Debt Management Agency and Financial Data Management Centre
  • A task force will be formed in April to help set up sector-neutral Financial Redressal Agency
  • Amendments to RBI Act proposed in the Finance Bill to set up PDMA