A quick look at Financial regulation in India

Shyamala Gopinath, RBI Deputy Governor,  gives a glimpseof financial regulation in India and the way Indian regulators managed the crisis.

Her speech looks at a very important aspect of regulation – the perimeter of regulation i.e. what all should be covered and what all should be excluded. She says:

In the Indian context, what has provided a huge systemic advantage is the fact that the regulation of key financial markets – money market, Government securities market, forexmarket and credit market – vests withthe banking regulator i.e. the RBI. Thus the channels of interconnectedness between banks and other financial sector entities are not beyond the regulatory purview. From a financial stability perspective, the above framework has proved to be a sound model.

How times change? This was exactly the problem stressed by many expert committees asked to look at Indian financial sector. They said RBI is doing too many things and should instead just focus on price stability. The criticism was pretty severe and there was continuous coverage in media. S0me used pretty harsh words which was clearly not needed atleast in the public space.

And come this crisis, we have Fed, BoE etc each asking for more powers to regulate their financial system and firms. All of a sudden RBI’s model became from unwanted to wanted. As the crisis was setting, the Indian model criticisers were confident that the systems in US, UK etc would prevail and crisis would be averted. However, we now know nothing was far from truth. Things were more messy in the model states than anybody could imagine. Moreover, the same set of people are now criticising the earlier model states wrt their regulations, policies etc.

Convenience at its best. I have no problems with economists changing their views. You need to change them as times pass by. But atleast admit and acknowledge it.

What is also needed is a review of all those grand finance fix plans for India. The public clearly needs more answers on what lessons should India take from this crisis. Unfortunately as crisis has eased a little, we have started talking about same set of issues. I am not saying Indian model is not perfect and does not need to change. But let it  atleast be in line with the current reality.

2 Responses to “A quick look at Financial regulation in India”

  1. djfjkj Says:


    Hindustan Times reported about “Indian Rupee Design Scam”

    Hindustan Times Hindi- Lucknow 18 March

    Hindustan Times Hindi- Lucknow 19 March


    Great Job Guys….

  2. djfjkj Says:





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