India’s Financial Sector Regulation Assessment

MUMBAI (Reuters) – India’s financial sector regulators need to establish a formal process for assessing the impact of their regulations, according to the government’s Economic Survey presented on Friday.

The survey, released a day before the annual budget, outlines the state of the economy and highlights longer-term economic and policy issues. Its suggestions are non-binding.

According to the report, financial regulators, including the Reserve Bank of India, Securities and Exchange Board of India, and the Insolvency and Bankruptcy Board, primarily self-regulate. It notes the potential for improvement in their responsiveness despite existing public consultation processes before new regulations are finalized.

The report recommends that regulators create an independent Regulatory Impact Assessment (RIA) agency within their organizations. This RIA would report directly to the regulator’s board, which comprises government members and independent directors.

Such a move would facilitate an impartial assessment of the regulatory processes and outcomes, encompassing the economic and social impacts of regulations. The report emphasizes that this would also enhance transparency and the responsiveness of regulators.