FMC may get better of Sebi

After a long-drawn turf war between the finance ministry and the ministry of food and consumer affairs, FMC had received the regulatory mandate for three years thanks largely to Sharad Pawar, the minister for agriculture, food and consumer affairs, who is a political heavyweight.

The review is due next month. But a senior government official told Business Standard that the finance ministry, which was arguing Sebi's case during M Damodaran's term, may not push too much this time knowing the political equations.

"There is not much change in the circumstances between 2005 and now to warrant a change in the regulatory system," the official said.

Besides, sources said no fingers were pointed at FMC for the happenings in the futures market. The main criticism was the lack of powers and the absence of an enabling environment to help the regulator in cracking the whip on errant market players.

The government had piloted a bill to amend the Forwards Contracts (Regulation) Act, 1952. But fears of political protests forced the government to let an ordinance, empowering the regulator to levy penalty on offenders, to lapse. "FMC has done everything within its powers. How it has fared is a matter of perception," the official said.

While the government has being debating the need for a unified financial sector regulator, it has not been able to implement the move. A high-level committee on financial sector reforms headed by Raghuram Rajan, Professor at the Graduate School of Business, University of Chicago, had suggested amendments to the SEBI Act, so as to confer the equity market regulator with powers akin to other regulators.