Financial sector reforms are at the centre stage of the economic liberalization that was initiated in India in mid 1991 but still, it could not grow as compare to other country financial sector. After 60.5 decades still, we cannot make good shape to financial sector. I write some important reforms in financial sector to accelerate Indian economy.
1. Multiple Regulators in India –
With multiple regulators in India, there are varying regulatory requirements which often leads to regulatory arbitrage. An example of this is the similarity between mutual funds and ULIPs, the first which is regulated by the SEBI and the second which were regulated by the IRDA. SEBI imposes very different levels of disclosure and ongoing transparency on the outcomes of mutual funds compared to the standards of disclosure required by the IRDA. In an example on differing standards of regulation on distributors, employees of banks who come under regulation by the RBI can distribute financial products such as mutual funds and insurance products, without adhering to the rules and regulation of SEBI and IRDA
1.The present arrangement has gaps for which no regulator is in charge such as the diverse kinds of ponzi schemes that periodically surface in India, which are not regulated by any of the existing agencies
2. Organizations such as chit funds appear to be completely out of the purview of any financial sector regulator
3. The existing framework also contains overlaps between laws and agencies leading to incidences in which conflicts between regulators has consumed the energy of economic policy makers and held back market development
4. Securities and Exchange Board of India’s (SEBI) extended litigation against the Sahara group and the recent investigations on alleged money laundering by some banks using insurance products are good examples of both regulatory gaps as well as opportunities for arbitrage
2. Kyc Reforms – It is big challenge to make quality KYC of customers. If we have objective of Financial Inclusion. Need to people have correct & clear Documents because if Financial Institution and Banks want to provide Financial Products like Insurance, Loans & Accounts its faces difficult to categories genuine customers neither it will increase NPA. So, Need Reforms. Aadhar Card can make Progressive Reforms and beneficial to people of India.
3. Technical Reforms – Still, India have no strong Data collection & preservation for betterment of People. Central Statistical Department still fighting regarding this. If Government want to give subsidy to exact people but they don’t have. Still Technical challenge exists in Financial Sector. Need to interconnect to all Banks & Financial Institutions for good, strong, clear & transparent Data.
4. Reform to Implement Financial Rule & Regulation ¬– Still Many Financial Institutions do not follow the Rules & Regulation. So, we can see financial irregularity, Scams like Financial Accounting Fraud in Sataym Company, Sahara Group scam, Harshad Mehata Scam etc. Still Protector of Financial Law like C. As are violators of Financial Law. Presently they are commission Agents Not Chartered Accountant. I want to focus on adherence of financial Law. Need to define duty of C.As and penalize who violate or use the loopholes of financial law.
5. Reform to Make Complete Regulation in Micro Finance Sector – we can see after1991 many new sectors opened in financial area but Government and Regulators unable to make exact and complete law. Mohd, Yunus got Nobel Prize for upgrade to Poor & Rural People by Micro Finance but after certain period of time we have seen many institutions playing in this area and exploit to poor people. They played intermediary between banks, insurance companies & poor people. Earn Commission by selling of insurance and financial product. Important things cost is high due to big profit. Some are showing Non Profitable institutions or charitable institutions but realty speaks other things they make high profit & manipulate in financial of institutions. Still, there is no strong rule & regulation.
6. Reforms in Human Resource Management in Financial Sector – At Present Financial sectors facing crisis of good people. Maximum people do not like to do job in financial sector. Particularly, Public & Private Sectors banks crisis of employee. Attrition rate is high. Targets, lengthy work & other reasons to people to move other area.
Conclusion – still, many challenges exist in Indian Financial Sector. Need various types of Reforms. It is big area in economy. We can categories or divide some parts to this area and find challenges and loopholes for making strong Indian economy.
1. Multiple Regulators in India –
With multiple regulators in India, there are varying regulatory requirements which often leads to regulatory arbitrage. An example of this is the similarity between mutual funds and ULIPs, the first which is regulated by the SEBI and the second which were regulated by the IRDA. SEBI imposes very different levels of disclosure and ongoing transparency on the outcomes of mutual funds compared to the standards of disclosure required by the IRDA. In an example on differing standards of regulation on distributors, employees of banks who come under regulation by the RBI can distribute financial products such as mutual funds and insurance products, without adhering to the rules and regulation of SEBI and IRDA
1.The present arrangement has gaps for which no regulator is in charge such as the diverse kinds of ponzi schemes that periodically surface in India, which are not regulated by any of the existing agencies
2. Organizations such as chit funds appear to be completely out of the purview of any financial sector regulator
3. The existing framework also contains overlaps between laws and agencies leading to incidences in which conflicts between regulators has consumed the energy of economic policy makers and held back market development
4. Securities and Exchange Board of India’s (SEBI) extended litigation against the Sahara group and the recent investigations on alleged money laundering by some banks using insurance products are good examples of both regulatory gaps as well as opportunities for arbitrage
2. Kyc Reforms – It is big challenge to make quality KYC of customers. If we have objective of Financial Inclusion. Need to people have correct & clear Documents because if Financial Institution and Banks want to provide Financial Products like Insurance, Loans & Accounts its faces difficult to categories genuine customers neither it will increase NPA. So, Need Reforms. Aadhar Card can make Progressive Reforms and beneficial to people of India.
3. Technical Reforms – Still, India have no strong Data collection & preservation for betterment of People. Central Statistical Department still fighting regarding this. If Government want to give subsidy to exact people but they don’t have. Still Technical challenge exists in Financial Sector. Need to interconnect to all Banks & Financial Institutions for good, strong, clear & transparent Data.
4. Reform to Implement Financial Rule & Regulation ¬– Still Many Financial Institutions do not follow the Rules & Regulation. So, we can see financial irregularity, Scams like Financial Accounting Fraud in Sataym Company, Sahara Group scam, Harshad Mehata Scam etc. Still Protector of Financial Law like C. As are violators of Financial Law. Presently they are commission Agents Not Chartered Accountant. I want to focus on adherence of financial Law. Need to define duty of C.As and penalize who violate or use the loopholes of financial law.
5. Reform to Make Complete Regulation in Micro Finance Sector – we can see after1991 many new sectors opened in financial area but Government and Regulators unable to make exact and complete law. Mohd, Yunus got Nobel Prize for upgrade to Poor & Rural People by Micro Finance but after certain period of time we have seen many institutions playing in this area and exploit to poor people. They played intermediary between banks, insurance companies & poor people. Earn Commission by selling of insurance and financial product. Important things cost is high due to big profit. Some are showing Non Profitable institutions or charitable institutions but realty speaks other things they make high profit & manipulate in financial of institutions. Still, there is no strong rule & regulation.
6. Reforms in Human Resource Management in Financial Sector – At Present Financial sectors facing crisis of good people. Maximum people do not like to do job in financial sector. Particularly, Public & Private Sectors banks crisis of employee. Attrition rate is high. Targets, lengthy work & other reasons to people to move other area.
Conclusion – still, many challenges exist in Indian Financial Sector. Need various types of Reforms. It is big area in economy. We can categories or divide some parts to this area and find challenges and loopholes for making strong Indian economy.
