Public Administration Mains 2017 : Model Question and
(Public Administration Paper II / Chapter: Significant Issues In Indian
(Current Based) Question
: With the Creation of new regulatory agencies in the wake of liberalization,
overlapping jurisdictions and conflicts become the new trend. Is there need for
the creation of a Super - regulator or unified regulator? (30 Marks/350 Words)
Model Answer :
The creation of sector –specific independent regulators comes in wake of
tendency to address sector specific challenges and to ensure best interest of
consumers. The conflicts between these independent regulators mostly due to
overlapping jurisdiction. The idea of having a unified financial sector
regulator over the medium-term is borrowed from the Raghuram Rajan Committee on
financial sector reform.
The Planning Commission in its Draft Regulatory Reform Bill has sought
creation of an enabling legislation which will monitor the working of sectoral
regulators, maintain convergence in their functioning , make them accountable
and at the same time maintains their independence, at times referred to as
The Financial Sector Legislative Reforms Commission (FSLRC) is right in
opting for a single or super regulator to replace those in equity, commodities,
pensions and insurance sectors. The idea is to move from sectoral regulation to
a broader framework of rules and principles. The proposed clubbing of SEBI, FMC,
IRDA and PFRDA is a significant step.
A multiplicity of regulatory agencies has created scope for regulatory
arbitrage, apart from making it difficult to protect consumer interest. It has
been observed that certain market players try to take advantage of multiple
regulators by operating in grey areas not covered by regulation.
The Unified Financial Regulatory Agency (UFRA) will subsume SEBI, IRDA, PFRDA,
and FMC. With banks being unique and specialised financial entities, the RBI has
been kept out of the purview of the UFRA. The FSLRC has pointed out a number of
benefits of the proposed UFRA.
(i) by dealing with all financial transactions other than banking and
payments it would help in realising regulatory economies of scale and scope.
(ii) it would promote efficiency, by providing a common platform, as proposed,
for organised financial trading in instruments, spanning equities, bonds,
currencies and commodity futures.
(iii) unification of regulation and supervision of financial firms such as
mutual funds and insurance companies would yield to consistency in consumer
protection and micro-prudential regulation.
The need for a UFRA has been felt in the context of confusion over the
jurisdiction of different regulatory agencies over different financial products.
(Total Words- 351)
(Linkages : New Regulatory Agencies and Overlapping Jurisdiction, New
Regulatory Agencies and Super Regulator, Super Regulator and FSLRC, Super
Regulator and UFRA)