. What do you think that there is need of a supreme regulator for the financial market over various financial market institutions?

The Finance Ministry wants to bring all the existing regulatory bodies in the country under one supreme regulator. It floated a note on the subject at a meeting the Finance Minister had with the heads of public sector banks in January 2010.

The note suggests the merger of the functions of the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and the yet to be formed Pension Fund Regulatory and Development Authority under one unified command. It draws its inspiration from the U.K. model of the Financial Services Authority. While floating the note, the Ministry was perhaps unaware or dismissive of the views of the Finance Minister had expressed at a conference organized by the IRDA. They also argued that India was too vast a country to have a single regulator, but added that there was need to strengthen the existing regulators and ensure that they worked together. It is likely that in its zeal to reform, the Ministry is concerned with the complexities of the present financial market, the blurring of areas between sectors such as banking and insurance, and more importantly, the inadequacy of regulation by the various agencies.

Dealing specifically with regulatory structure, "Focusing entirely on regulatory structures may not be an adequate response to the current weaknesses, the changes needed in the objectives and coverage of regulation, and the emerging challenges to growth as well as greater openness in the external sector. Perhaps, the debate has to go beyond the single or multiple regulators or hybrid arrangements, while recognizing some urgency for putting in place effective arrangements for regulatory coordination." As he put it, "designing and managing all these changes require a combination of political will and professional skill." In short, a country has to choose a model having regard to its own needs and may not implicitly adopt a model evolved by another country. Surprisingly, there is a smorgasbord of models to choose from!