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FM pitches for regulatory impact assessments to enhance accountability in policy-making

The main focus of financial regulators should be market development, she says

Union Finance Minister Nirmala Sitaraman addresses a press conference after the G20 meetings under India's G20 Presidency, in Bengaluru | PTI

Union finance minister Nirmala Sitharaman on Friday pitched for a "regulatory impact assessment" to study the positives and negatives of a decision before it is taken, and also for existing rules.

She said having such a facility can help enhance the transparency and accountability in the policymaking process.

"We may also have a regulatory impact assessment to critically assess the positive and negative effects of proposed and existing regulations and non regulatory alternatives," she said, speaking at an event here.

Time limits to decide the applications under various regulations should also be named in the interest of ease of doing business, she added.

Regulatory actions may vary from disclosure to light touch regulation and supervision to tight regulation and full fledged supervision depending on the risk implications, she said.

"Quality, proportionality and effectiveness of regulations matter the most for ease of doing business," she said.

Sitharaman said the main focus of financial regulators should be market development and also investor protection.

The markets should be enabled for ease of raising capital, as much as the investors should be given the necessary protection both simultaneously, she added.

Admitting that the job of a regulator is onerous and often thankless, Sitharaman said they should maintain the balance between the two tasks.

She asked the regulators to be "flexible" and ensure that their decisions do not stifle innovation.

There is a need to enhance mobilisation of domestic savings towards financial assets by easing access to the financial market, she said.

She pitched for public consultations to be made into an integral aspect in the process of regulation making and issuing subsequent directions, she said.

"I firmly believe that a set of broad indicative benchmarks for a good consultative and participatory process for better understanding between the regulators and the regulated may help in achieving better economic outcomes, smoother acceptance of regulatory changes and effective functioning of financial markets," Sitharaman said.