Regulators must have financial autonomy: Bhave
11 Dec 2010
Securities and Exchange Board chairman C B Bhave on Friday made a strong pitch for safeguarding the financial autonomy of regulatory bodies, warning that interference would "jeopardise" their independence.
"If regulators have to depend on the executive for the release of funds, the question of independent behaviour by the regulators will be jeopardised. It is necessary to carefully consider the pros and cons of taking (away) the financial autonomy from the regulators," he said at a lecture at IMC in Mumbai.
Bhave was reacting to reports that the government plans to make regulators deposit their surplus funds with the Consolidated Fund of India.
"Currently, there is a line of thought - and you must have read about it in the media - that regulatory authorities should not be allowed to have funds of their own and that these funds should be merged with the Consolidated Fund of India," Bhave said.
Stating that regulatory autonomy vis-à-vis the executive is not only necessary, but also essential, he pointed out that in the case of SEBI and the Insurance Regulatory and Development Authority (IRDA), financial autonomy was built into legislation, which provides that such authorities would establish a separate fund into which the fees paid by market intermediaries would be credited.
At present, the money coming to regulators like SEBI by way of penalties is credited to the Consolidated Fund of India.
