Letter to BS: Regulators need to strengthen their supervisory mechanisms

The regulators must work closely with the government but they must have operational autonomy and be totally accountable for their work to Parliament

This refers to “Why is bad behaviour in FIs widespread?” (February 4). While I agree with what is written in the piece, I disagree with the conclusion. Yes, regulators need to strengthen their supervisory mechanisms and sharpen their market intelligence but the government is in no position to supervise the regulators. First, governments are too election focussed and maintain close proximity to powerful corporate lobbies which is why they cannot have an objective view in the matter. The recent pressures on the Reserve Bank of India (RBI) — to dilute prompt corrective action (PCA) norms, reduce capital adequacy and provide