A few days after Union Finance Minister P Chidambaram urged for the implementation of some of the proposals recommended by the Financial Sector Legislative Reforms Commission (FSLRC), its Chairman and former Supreme Court judge B N Srikrishna on Wednesday said that the country requires a total overhaul of the existing financial system if it has to achieve $30-40 trillion economy by 2025.
“By the year 2020-25, we hope to achieve $30-40 trillion economy. Ambition cannot be achieved unless there are steps taken towards it. Therefore, you need something that is drastic, something that is total overhaul of the existing financial system,” Srikrishna said.
Srikrishna said that there was an urgent need to bring together oversight functions of market, commodity, insurance and pension regulators, while calling greater accountability of RBI. “Regulators like RBI are to aid the government in administering and governing...No single central bank in the world can say, I am autonomous, therefore, I will decide what I will do.”
The proposal to set up the FSLRC was first included in the budget of 2010-’11. The panel was given the responsibility to rewrite financial sector laws keeping in present requirements in mind.
The panel submitted its report in March this year and recommended the setting up of Monetary Policy Committee to fix the policy interest rate. FSLRC also proposed the setting up of Unified Financial Agency that would include the powers of agencies such as the SEBI, IRDA, PFRDA and FMC.
FSLRC also proposed doing away with the multiple agency structure to scan foreign investment inflows as well as setting up of a Debt Management Office to generate money for government expenditure, which currently happens by issuing bonds through RBI.