Category : Industry
Date : Aug-03-2010 13:05
The Lok Sabha today passed the Securities and Insurance Laws (Amendment) and Validation Bill, 2010 which will replace the Ulip Ordinance. The bill calls for setting up a joint body under the chairmanship of the Finance Minister, and with representations from the four financial sector regulators and the Finance Ministry to address the issues of jurisdiction between the financial sector watchdogs.According to the Bill, the Reserve Bank Governor will assume the role of the vice-chairman of the joint committee thereby allaying apprehensions expressed by RBI over its autonomy. The government also assured that autonomy of existing sectoral regulators will not be diluted.Commenting on the matter in the Lok Sabha Finance Minister Mr. Pranab Mukherjee said, "it was true there were lots of apprehensions whether we are going to dilute the regulators'' independence or autonomy. It will only be in the case of jurisdiction disputes between the regulators that the joint mechanism will be used."Mr. Mukherjee further pointed out that only the regulators can refer the matter of jurisdiction to the joint committee. Further pointing out that the bill by no means will interfere with either monetary or regulatory functions of the Reserve Bank, Mr. Mukherjee said, "in no way, we are not interfering with the monetary authority. The RBI is the supreme (as far as monetary matters are concerned)." Adding further to the matter he said that in case of regulatory functions efforts would be made to solve these issues bilaterally and only then the unsolved disputes will be handled by the committee. Further providing a rationale behind allotting the post of vice-chairman of the proposed committee to the RBI Governor, he pointed out that the arbitrary function cannot be given to the interested party as a dispute may arise between the central bank and other regulators. Mr. Mukherjee further pointed out that it is imperative for the government to interfere, if the overall interest of the economy suffers due to contradiction between the regulators. Earlier June 18 the government had issued the Ulip Ordinance in a bid to end the dispute between the insurance watchdog Irda and the capital markets regulator Sebi over regulation of Unit-linked insurance products (Ulips).The war between the two regulators was initiated on April 9 with Sebi banning 14 life insurers from raising money through Ulips and the subsequent instruction issued by Irda asking insurance companies to ignore the Sebi order. Following this the Finance ministry had instructed the regulators to get a legal remedy as the matter could not be resolved mutually. Following the order Sebi moved the Supreme Court, which is yet to deliver a verdict on the matter. However later in June the government issued an Ordinance giving the jurisdiction of regulating Ulips to Irda.In addition to providing the regulation Jurisdiction to Irda the Ordinance also called for the need to constitute a joint mechanism comprising of representatives of the regulators and finance ministry to sort out any future disputes over jurisdiction of hybrid products. However the Reserve Bank Governor Mr. D Subbarao had raised certain objections on the proposed joint mechanism fearing that the same would affect the autonomy of regulators. The minister further pointed out that pension regulator PFRDA has been included in the committee through an executive order as a Bill to this effect has still not been passed by Parliament.Mr. Mukherjee further pointed out that Bill provides for the economic affairs secretary to be a member of the joint committee in place of the finance secretary as suggested earlier. In an earlier development CPI member Mr. Prabodh Panda withdrew the statutory resolution to disapprove the Securities and Insurance Laws (Amendment & Validation) Ordinance 2010 from the house. However he still questioned the government over its decision to bring the Ordinance before Supreme Court decides on the Ulip issue.
Date : Aug-03-2010 13:05
The Lok Sabha today passed the Securities and Insurance Laws (Amendment) and Validation Bill, 2010 which will replace the Ulip Ordinance. The bill calls for setting up a joint body under the chairmanship of the Finance Minister, and with representations from the four financial sector regulators and the Finance Ministry to address the issues of jurisdiction between the financial sector watchdogs.According to the Bill, the Reserve Bank Governor will assume the role of the vice-chairman of the joint committee thereby allaying apprehensions expressed by RBI over its autonomy. The government also assured that autonomy of existing sectoral regulators will not be diluted.Commenting on the matter in the Lok Sabha Finance Minister Mr. Pranab Mukherjee said, "it was true there were lots of apprehensions whether we are going to dilute the regulators'' independence or autonomy. It will only be in the case of jurisdiction disputes between the regulators that the joint mechanism will be used."Mr. Mukherjee further pointed out that only the regulators can refer the matter of jurisdiction to the joint committee. Further pointing out that the bill by no means will interfere with either monetary or regulatory functions of the Reserve Bank, Mr. Mukherjee said, "in no way, we are not interfering with the monetary authority. The RBI is the supreme (as far as monetary matters are concerned)." Adding further to the matter he said that in case of regulatory functions efforts would be made to solve these issues bilaterally and only then the unsolved disputes will be handled by the committee. Further providing a rationale behind allotting the post of vice-chairman of the proposed committee to the RBI Governor, he pointed out that the arbitrary function cannot be given to the interested party as a dispute may arise between the central bank and other regulators. Mr. Mukherjee further pointed out that it is imperative for the government to interfere, if the overall interest of the economy suffers due to contradiction between the regulators. Earlier June 18 the government had issued the Ulip Ordinance in a bid to end the dispute between the insurance watchdog Irda and the capital markets regulator Sebi over regulation of Unit-linked insurance products (Ulips).The war between the two regulators was initiated on April 9 with Sebi banning 14 life insurers from raising money through Ulips and the subsequent instruction issued by Irda asking insurance companies to ignore the Sebi order. Following this the Finance ministry had instructed the regulators to get a legal remedy as the matter could not be resolved mutually. Following the order Sebi moved the Supreme Court, which is yet to deliver a verdict on the matter. However later in June the government issued an Ordinance giving the jurisdiction of regulating Ulips to Irda.In addition to providing the regulation Jurisdiction to Irda the Ordinance also called for the need to constitute a joint mechanism comprising of representatives of the regulators and finance ministry to sort out any future disputes over jurisdiction of hybrid products. However the Reserve Bank Governor Mr. D Subbarao had raised certain objections on the proposed joint mechanism fearing that the same would affect the autonomy of regulators. The minister further pointed out that pension regulator PFRDA has been included in the committee through an executive order as a Bill to this effect has still not been passed by Parliament.Mr. Mukherjee further pointed out that Bill provides for the economic affairs secretary to be a member of the joint committee in place of the finance secretary as suggested earlier. In an earlier development CPI member Mr. Prabodh Panda withdrew the statutory resolution to disapprove the Securities and Insurance Laws (Amendment & Validation) Ordinance 2010 from the house. However he still questioned the government over its decision to bring the Ordinance before Supreme Court decides on the Ulip issue.
Comments