Financial and banking sector reforms in India are in the progress. Lots of pro active and constructive steps have been taken by Indian government in the recent past. Reserve Bank of India (RBI) in general and Finance Ministry of India in particular are really streamlining the banking and financial sectors of India.Keeping the pace, the Government of India has recently passed a resolution for the constitution of Financial Sector Legislative Reforms Commission (FSLRC) of India. The main objective of constitution of FSLRC is to rewrite and harmonise financial sector legislations, rules and regulations. This had become necessary as the institutional framework governing India’s financial sector was built over a century and the same has become redundant for the contemporary requirements.
Some of the areas that FSLRC can analyse and consider pertain to merger and acquisition norms, non banking financial companies regulation, wealth management regulations, cyber security for banking and financial institutions, due diligence by banks and financial sectors of India, etc.
Merger and acquisitions for banking sector of India is in the process of being streamlined. With the recent proposed amendments in the Banking Regulations Act, 1949, only RBI would have power to regulate M&A pertaining to banking sector. In fact, the proposed amendments have already been approved by Cabinet of India.
Non banking finance companies (NBFC) laws in India have also been streamlined by Supreme Court of India. A Bench consisting of Justice Markandey Katju and Justice Gyan Sudha Misra upheld the “constitutional validity” of such State laws and termed such laws as salutary measures which were long overdue to deal with scamsters.
RBI working group on non banking finance companies has also been established. Wealth management regulations in India have also been proposed to curb growing crimes arising out of this field.
RBI has also mandated cyber due diligence for banks in India. This way cyber frauds and cyber crimes can be tackled more appropriately by banks of India. Further, cyber security for banking and financial sectors of India has also been streamlined by RBI. RBI has recently released the information technology vision document for 2011-17 (IT Vision 2011-17). This document mandates both cyber due diligence and cyber security requirements on the part of banks operating in India.
These are some of the areas that FSLRC can consider. However, keeping in mind the roles and objectives of FSLRC, these issues are just part of the list that is much more elaborative and challenging.
