Former SEBI chairman M. Damodaran has said that the old rules, circulars and guidelines should be removed. That would solve part of the problem. The laws which are correct at present should be kept only.
The Reserve Bank of India (RBI) on 15 April constituted a Regulations Review Authority (RRA) under the chairmanship of the Deputy Governor. This means weeding out all the old regulations, circulars, and guidelines. Remain only those who are right in the present. RBI has also constituted a 6-member advisory group to invite applications and suggestions to be forwarded to the RRA.
Welcoming this new initiative, corporate governance advisory firm Excellence Enablers has suggested that the advisory group should proactively reach out to potential applicants on their own rather than waiting for applications and suggestions to reach them. Along with this, RRA should look into the rules, circulars, and guidelines to identify those who can be closed or scrapped with immediate effect.
Excellence Enablers is an organization of Damodaran itself. It has also said that the old rules, circulars, and guidelines should be removed. Only when these are removed, new regulations will keep coming into existence. In this context, it has been suggested that the RRA should also look into the proposed new regulations to see if they are necessary. Will any existing regulations, circulars, and guidelines address the issue involved?
RRA is not a new initiative. In 1999, RBI had set up an RRA with a period of one year, which was extended to one year, to address the problem of outdated regulations, circulars, and guidelines. Significant progress had been made in this regard at that time. Excellence enablers believe that the RRA should be a permanent body without a limited tenure, so that the problem of outdated laws, circulars, and guidelines is solved forever.
Excellence enablers have also recommended that the new regulations should have sunset clauses wherever possible. This would allow the regulations to have an effect at the expiration of a certain period and if they are true and remain in place, their usefulness should be carried forward. It is also expected that other regulators will follow this initiative of the Reserve Bank and implement similar authorities within their organizations.
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