To plug regulatory gaps, clear rules and better coordination among regulators was required, two former senior financial regulatory officials said on Monday.
K C Chakrabarty, who recently retired as deputy governor of the Reserve Bank of India (RBI), said unless regulatory arbitrage was reduced, there would be a tendency to avail of gaps, adding not being able to address this issue was a collective failure of society.
He was speaking at a function organised to release Sahara: The Untold Story, a book by business journalist Tamal Bandyopadhyay.
On regulatory challenges in dealing with the Sahara group, the former RBI deputy governor said the central bank had tightened regulatory norms to discourage the business of residuary non-finance companies. In July 2008, RBI had reconstituted the Sahara India Financial Corporation board and appointed three independent directors – H N Sinor, former managing director of ICICI Bank; chartered accountant T N Manoharan; and 1970 batch Indian Administrative Service officer Arvind Jadhav.
Later, releasing the book, M Damodaran, former chairman of the Securities and Exchange Board of India, said the Sahara group had moved from one unregulated jurisdiction to another. There was a need for more debate on the quality of regulation, he said, adding regulators had to carry out much more ground work to improve oversight. Laws that had clarity, certainty and continuity would go a long way in improving the business environment, Damodaran said.