What is FSLRC all about?

Ajay Shah links to this speech by Justice Srikrishna, the chair of FSLRC report.

A pretty straight forward speech. He starts with the proposed changes in FSLRC which range from consumer protection to macro management.

In the end he says:

Is this a leap into unknown territory? Hardly. This is the approach that many countries have implemented already. And yet, it is a bold move. But it is one that the Indian financial sector and the Indian consumers deserve. Our financial architecture has become unwieldy and unresponsive. Provisions that were intended be temporary (the RBI Act of 1934 is an example) have become permanent. Sometimes this is a result of inertia, rather than careful planning. Arrangements that were the best we could do at the time, are now considered to be the only way to do things. One fears that as a result, parts of our regulatory machinery have become brittle, fragile, or worse, completely irrelevant and utterly useless, if not downright harmful to our interests. It is this concern which motivated the proposed reforms. This is not change simply for the sake of change. And indeed what we proposed is far from cosmetic.

This is fundamental re-engineering of a sector that desperately needs it. To push ahead with our current arrangements and simply hope for the best, would indeed be reckless, despite our known reliance on jugaad.. We must reform in anticipation of future crises, not only in response to past ones.

Our preparedness for the future requires that our institutions and our systems be world class, when we expect our GDP to be in the region of about 20/30 trillion USD in about 15/20 years, and we entertain the ambition to be one of the leading leading players in the world’s financial arena. Only legislation can drive institutional change to yield the high performance institutions that we need. Change is necessarily disruptive; hence people abhor it. Reform unsettles the powerful; hence it ruffles feathers. But it is necessary and it must be done now.

He takes on those who are trying to stifle reforms in Indian financial regulation space and trying to protect their turfs. Amazing to see how people who proposed the various changes are now opposing the same as their job profiles have changed. But this is what much of economic reform is all about. Just talk about till it does nothing to you or your role…

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