Govt won't intervene in regulators autonomy: FM

A day after the Reserve Bank of India (RBI) expressed concern at the recent Ulips Ordinance, Finance Minister Pranab Mukherjee today assured the regulators that his ministry will not intervene in their autonomy.

"The intention is quite clear; we are not going to interfere with the autonomy of the regulators in their respective areas," Mukherjee told reporters here.

Concerned over the dilution of its role in dealing with inter-regulatory disputes, RBI Governor D Subbarao had yesterday met the Finance Minister and suggested to the government to reconsider the Ordinance it had issued last month to end the Irda-Sebi turf war over controlling Ulips.

The Ordinance also talked about setting up of a committee to decide on jurisdiction issues of hybrid products.

Mukherjee said, "The Ordinance laid clearly this point that if there is a conflict between two regulators in respect of the hybrid jurisdiction then this joint mechanism will interfere. The (proposed) joint mechanism contains three members from the government, including the finance minister and the four members are the four regulators."

"So there cannot be any threat to autonomy of the regulators," Mukherjee said.

Subbarao had yesterday said after meeting Mukherjee in the national Capital that "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. The RBI has certain reservations and concerns, which we have expressed in the letter".

Subbarao also raised issues concerning the role of the central bank in the light of the recent Ordinance.

The government last month ended a two-month-long turf war between insurance regulator Irda and capital market watchdog Sebi through an Ordinance that made it clear that Ulips would be regulated by Irda.

An Ordinance is in the nature of law and is promulgated by the President when Parliament is not in session. Such a legal measure needs to be ratified by Parliament within six months for it become a law.

Fearing that the Ordinance would dilute the central bank's role as financial sector coordinator, the RBI reportedly requested the finance ministry to let the Ordinance lapse and not covert it into a law.

Unless the government seeks approval for the Ulip Ordinance in the forthcoming Monsoon session of Parliament, it will lapse and cease to be valid.

Currently, inter-regulatory issues are looked into by a High Level Coordination Committee (HLCC), comprising financial sector watchdogs and Finance Ministry officials and headed by the RBI.