A day after the Reserve Bank of India (RBI) governor D Subbarao expressed his concerns over the dilution of RBI's role and autonomy, Finance Minister Pranab Mukherjee tried to put to rest all such concerns as he said the government does not intend to interfere in the autonomy of regulators.
"The intentions are quite clear. We are not going to interfere in the autonomy of regulators in their respective areas," the finance minister told media on the sidelines of a UTI AMC event on financial inclusion.
RBI raised its concern after the government passed an ordinance in June to end the conflict between IRDA and SEBI over the regulation of the investment component in unit linked insurance policies.
"I have come to meet the finance minister in connection with the ordinance that they have issued regarding settlement of the dispute on regulatory jurisdiction. RBI has certain reservations and concerns, which we have expressed in the letter," Subbarao had said after the meeting.
The finance minister made it clear that regulatory autonomy will not be diluted as the committee to be set up will decide only on the jurisdiction aspect of hybrid products.
"A joint mechanism will interfere if there is a conflict between two regulators in case of hybrid jurisdiction," said the finance minister. "The joint mechanism will contain three members from the government, including the finance minister and four members of regulators."
Concerned over the dilution of its role in dealing with inter-regulatory disputes, RBI Governor D Subbarao had on Monday met Mukherjee and asked the government to reconsider the ordinance it had issued in June.
As of now, inter-regulatory issues are looked into by a High Level Coordination Committee (HLCC) comprising the financial sector watchdogs and Finance Ministry officials and headed by the RBI.