Context A committee set up under the Department of Economic Affairs has recommended the creation of a statutory body that will standardise data from all financial sector regulators in a single database and provide analytical insights based on the data. Issue: Report of the committee to study the financial data management legal framework in India Report suggests Financial Data Management Centre (FDMC): The passage of a Bill in Parliament — the Financial Data Management Centre Bill 2016 — to create the statutory body, as recommended by Finance Minister ArunJaitley. As per the proposed act, Purpose of the FDMC: Subject to the provisions of this Act, or any other law for the time being in force, it shall be the duty of the Data Centre to take measures to standardise data from regulators in consultation with the regulators, enable financial service providers to submit data in a standardised electronic format, analyse the data and maintain a financial system database Powers of FDMC:The powers of the Financial Data Management Centre (FDMC) will include the establishment, operation and maintenance of the financial system database along with collecting financial regulatory data and providing access to it. The body will also provide analytical support to the Financial Stability and Development Council (FSDC) on issues relating to financial stability RBI’s objection Breach of confidentiality: In 2015, when the FSDC first suggested the creation of such a body, the Reserve Bank had objected to sharing company-specific data with the body as it was not statutory in nature, and sharing such data would be a breach of confidentiality. View of Department of legal affairs on FDMC The majority of the financial sector regulators being statutory in nature, it is not clear from the proposal how the non-statutory FDMC will collect data from such regulators Backdrop Keeping the abovementioned concerns in mind, the Department of Economic Affairs re-examined the issue and obtained the Finance Minister’s approval to establish a statutory FDMC, following which a committee was formed to recommend the way forward What is Financial Stability and Development Council (FSDC)? Financial sector regulation is a vital service for bringing healthy and efficient financial system in the economy. There are different regulators for various segments of financial sectors, like the RBI for commercial banks and NBFCs, SEBI for capital market etc. At the same time, there should be coordination among these financial sector regulators to ensure better efficiency as well as for avoiding overlapping of functions. For this, the Government has formed the Financial Stability and Development Council in December 2010, with the Finance Minister as the Chairman The immediate reason for the establishment of the FSDC was the tussle between SEBI and IRDA on the regulation of ULIPs. ... Publishes on : 06-Jan-2017 11:12 AM
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