Indian Financial Code Essay examples

1971 Words May 9th, 2016 8 Pages
Indian Financial Code
Summary
The Indian financial system is suffering from the problems of lack of financial inclusion, growth of unregulated shadow market, slow pace of innovation and the challenges of financial integration. It is felt that the present code of the financial sector need to be reviewed and altered, while keeping in mind the present needs of the economy. This is because most of the laws are very old, there are overlaps and inconsistencies, and there is lack of clarity in terms of regulations due to the presence of a number of regulators. It is also argued that the laws in India are traditionally evolved on a problem by problem basis.
With the advent of the New Economic Policy in 1991, substantial economic liberalisation
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These committees called for- capital account convertibility, financial market integration and competition (Mistry Committee, 2007); freedom to the players in order to increase financial inclusion and strengthening the financial and regulatory infrastructure (Rajan Committee, 2008); minimizing the information asymmetry in retail financial products and educating the consumer (Swarup Committee, 2010); and rationalization of capital account regulation for different category of players (Sinha, 2010). Some of these recommendations were implemented but a much deeper change was needed. The recommendations proposed by these committees required legislative changes which prompted the then UPA government to set up the Financial Sector Legislative Reforms Commission (FSLRC) to rewrite the laws. The commission submitted its report in 2013 which was again given for revision.
The revised draft of the Indian Financial Code with 414 clauses seeks to bring together laws governing different sectors of the financial system and aims to restructure existing regulatory agencies by strengthening their accountability and functioning. It outlines the powers of the regulating agencies, defines their objective and makes them accountable for achieving these objectives. The code seeks to address the problem of the existence of multiple regulatory agencies. The presence of so many regulatory bodies in the financial market leads to overlapping of objectives, unclear jurisdiction

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