Financial watchdogs to soon put time limits for key decisions

India’s financial sector watchdogs will soon prescribe time limits for key regulatory decisions such as vetting an entity for a banking licence and also put out regulations for public discussions before they are adopted under a process revamp announced in the budget, government officials said.

The idea is to make regulators more accountable and responsive without impinging on their independence, they said.

“We want them to put time limits on settlement of each kind of regulatory application…It’s not a statutory deadline, but it is a target. Regulators can decide the time limit and then publish it,” said one of the officials, who did not wish to be identified. The official said there cannot be a situation where a regulator does not decide on an application endlessly.

Additionally, under the new framework, regulators will have to review their sectoral regulations periodically to see if some provisions have become irrelevant or are too complicated and accordingly propose or undertake remedial measures.
Finance minister Nirmala Sitharaman said in her budget speech on February 1 that to meet the needs of Amrit Kaal and to facilitate optimum regulation in the financial sector, public consultation, as necessary and feasible, will be brought to the process of regulation-making and issuing subsidiary directions.

“To simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations,” she said.

Financial sector regulators will have to consult key stakeholders on a proposed regulation before it is adopted as part of the exercise.Regulatory impact assessment is a norm in most member countries of the Organisation for Economic Co-operation & Development that enables policymakers to assess the impact of a proposed regulation to achieve better and more acceptable regulatory outcomes.