Reserve Bank of India Governor Raghuram Rajan on Tuesday trashed the much talked about Financial Sector legislative Reforms Commission (FSlRC) and described one set of its recommendations as “somewhat schizophrenic”.
Saying that he wanted to debate parts of the FSlRC report, Rajan said there are two issues -- the oversight of regulators and their size and scope.“The second area of tension is the appropriate size and scope of regulators. The FSlRC’s recommendations seem somewhat schizophrenic here,” he said.
On the one hand, it emphasises synergies in bringing together some regulators into one entity. But in the process it suggests breaking up other regulators, with attendant loss of synergies,” Rajan said at the State Bank of India’s ‘Banking and Economic Conclave’ here.
The Governor also said the FSlRC suggests laws that do not micromanage, giving regulators the freedom to fill in the details in consonance with the changing needs of the economy.
“At the same time, the FSlRC wants to check and balance the activities of regulators through judicial oversight. Too much of checks and balances could completely vitiate the flexibility afforded by rewriting laws,” he said.
The FSlRC was set up in March 2011 to review and rewrite the legal institutional framework of financial sector laws. Positive statement by Reserve Bank of India’s Governor Raghuram Rajan on readiness to deal with any external shocks arising due to ongoing Iraq crisis boosted sentiments, experts added. Global attention has turned to the Federal Reserve’s policy meeting that wraps up on Wednesday. Expectations are for the bank to cut a further $10 billion from its monthly stimulus spending and keep interest rates at record lows.
On the domestic currency front, rupee appreciated for the first time in three days against the dollar and ended 13 paise up at Rs 60.03 per dollar boosted by late surge in local equities and comments by RBI Governor.
As per forex experts, fresh dollar selling by exporters ahead of two-day Federal Reserve’s policy meeting starting late on Tuesday also aided the rupee rise. Domestic currency started the session weak at Rs 60.35 per dollar and dropped further to an over seven-week low of Rs 60.51 per dollar, a level not seen since April 29, 2014 when it had touched an intra-day low of Rs 60.63 per dollar.
Rupee later bounced back in line with sharp rise in local equities to close at the day’s high of Rs 60.03 per dollar. In straight two previous trading sessions, it had plunged by 91 paise on fears that costlier crude due to Iraq unrest would balloon India’s fuel import bill and cause trade deficit to widen. The dollar index was up 0.06 per cent against rivals.
“The rupee was seen gaining after the Reserve Bank of India chief said India was well positioned on the external front to deal with shocks,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.
On Sensex, 24 out of the 30-share index finished higher while others concluded lower. Major gainers were ONGC, Axis Bank, SBI, Coal India, BHEl, Sesa Sterlite and GAIl which rose by 4.07 per cent, 3.79 per cent, 2.91 per cent, 2.89 per cent, 2.84 per cent, 2.76 per cent and 2.55 per cent respectively.
However, M&M slid the most by 1.77 per cent, followed by Hero Motocorp 0.83 per cent and Dr Reddy’s lab by 0.58 per cent.