Better regulation ensures transparency and less chances for manipulation. This book emphasizes the need for regulators to be proactive. In recent times, the regulatory framework for the financial markets has changed drastically. The major players in the Indian financial markets, for whom the regulations have changed are banksincluding co-operative banks, non-banking finance companies, mutual funds and the insurance industry.
The financial sector reforms were an important part of the overall process of the economic liberalization program. After more than a decade of reforms, India's financial sector has undergone a transformation. The new trend of universal banking and mergers between financial institutions has led to intra-integrationintegration between different segments of the domestic financial system. The Indian financial system has also become much more integrated with the global financial system, which has led to inter-integration. The reforms were mainly directed at the legal, institutional, knowledge and technological infrastructures. The approach of the government and the regulatory authorities had been a cautious, step-by-step approach. Because of these reforms, though our financial markets have become one of the most modern markets, there still remain some issues that need to be addressed. For instance, the demat system, though introduced with much fanfare, never became popular with retail investors because of its cost structure. Similarly, the SARFAESI Act, introduced recently focuses more on managing the NPAs than on developing a securitization market. Further, the multiplicity of regulators also poses a problem of accountabilitywhether you talk about the vanishing companies scam of 1995-96 or the recent downfall of GTB.
The benefits of a liberalized financial system cannot be overemphasized. But a series of financial crisis has proved that such a liberalized financial system is more fragile and, hence, needs better regulation. Better regulation covers the areas like better disclosure standards, better supervisory norms and better implementation. Given this, the book focuses on the regulation of the Indian Financial markets. It discusses the role, which regulators can play in ensuring better regulation of the markets, the regulatory changes that have been introduced and the issues, which remain unresolved. |
