Lok Sabha Question No. 202 (UNSTARRED), answered on 2024-07-22
Subject: Regulatory Reforms
Ministry: FINANCE
Asked by: Dr. Pradeep Kumar Panigrahy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 202 ANSWERED ON JULY 22, 2024/ ASHADHA 31, 1946 (SAKA)

## REGULATORY REFORMS

## 202. Dr. Pradeep Kumar Panigrahy:

Will the Minister of Finance be pleased to state:

- (a) whether  India's  financial  sector  can  strategically  leverage  regulatory  reforms,  innovative financial products, and sustainable finance initiatives to drive economic growth, increase per capita income and expenditure, enhance stock market performance, and promote wealth creation for the population, while ensuring financial inclusion, market stability, and longterm investment practices; and
- (b) if so, the details thereof?

## ANSWER MINISTER OF STATE FOR FINANCE

## (SHRI PANKAJ CHAUDHARY)

- (a) and (b): Yes Sir. The financial sector is one of the important drivers of economic growth.  The financial  sector  regulators  have  undertaken  various  steps  to  provide  a  conducive  regulatory environment to encourage innovation, competition, stability and sustainable growth.

Some of the key initiatives taken by the regulators are as follows:

- i. Reserve Bank of India (RBI) has undertaken various measures to strengthen the balance sheet of banks which, inter alia, includes the Prudential Framework for Resolution of Stressed Assets which is a principle-based framework and provides for early recognition and resolution of default in respect of large borrowers within a time bound manner. It has promoted the development of a digital payment infrastructure to extend the coverage for digital payments and improve efficiency of payments.
- ii. The  shortening  of  settlement  cycles  in  securities  market  in  India  by  Securities  and Exchange Board of India (SEBI), from T+2 to T+1 in 2023, has been instrumental in reducing the time for trade settlements, enhancing liquidity and reducing counterparty settlement risk.

- iii. Insurance Regulatory and Development Authority of India (IRDAI) has simplified the registration  requirements  and  regulatory  processes  for  insurance  and  re-insurance companies. A comprehensive regulatory review has been undertaken, transitioning from a rule-based approach to a principle-based architecture while also establishing a resilient and robust risk management framework.
- iv. Pension  Fund  Regulatory  and  Development  Authority  (PFRDA)  has  rationalised regulatory  compliance requirements by bringing in enhanced disclosures and  has laid down provisions related to  compensation/indemnification  to  the  subscribers  that  have strengthened the governance of the intermediaries.
- v. International  Financial Services Centres Authority (IFSCA) has instituted an enabling framework  in  GIFT-IFSC  to  offer  a  holistic  ecosystem  for  financial  services  with  a globally  harmonized  regulatory  structure,  competitive  tax  structure  and  ease  of  doing business.
- vi. All the financial sector regulators have established their regulatory sandboxes to facilitate the  testing  of  innovative  financial  products  and  services  in  a  controlled  environment, promoting adoption of fintech.

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