SAT, which is mandated to hear appeals against orders of SEBI, may become the new Financial Sector Appellate Tribunal that can hear appeals against all regulators
 

The government is contemplating strengthening the Securities Appellate Tribunal (SAT) as the Appellate Tribunal which can hear appeals against any action of any financial regulator.

Moneylife has reliably learnt that Rajeev Chandrasekhar, Member of Parliament (MP) from the Rajya Sabha and Member of Standing Committee on Finance, in a letter to the finance minister, has called for the government to convert the SAT into a Financial Sector Appellate Tribunal or a quasi-judicial forum to resolve disputes between regulators.

In a written reply, the finance ministry said it is contemplating strengthening the SAT by making it a Financial Sector Appellate Tribunal (FSAT). The FSAT can hear appeals against any action of any financial regulator in the context of legislative proposals in the Forward Contracts (Regulation) Act (FCRA) and Insurance Regulatory and Development Authority (IRDA) amendment proposing to mandate SAT as the appellate authority under these Acts, the ministry said.

However, since the proposal is at the initial stage and would require extensive discussions with all financial sector regulators, the ministry has said that it is not able to provide more details and any timeline by when a final decision will be taken.

Last month the government had to issue an ordinance due to a turf war between the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) over the popular unit-linked insurance plans (ULIPs).

Earlier this month, Parliament passed the Securities and Insurance Laws (Amendment and Validation) Bill 2010 that will replace the ordinance. The Bill provides for a joint mechanism headed by the finance minister to resolve differences among the financial regulators - SEBI, IRDA, Reserve Bank of India (RBI) and the Pension Fund Regulatory and Development Authority (PFRDA). The Bill seeks to amend the Reserve Bank of India Act, 1934; the Insurance Act, 1938, and the Securities and Exchange Board of India Act, 1992.

Finance minister Pranab Mukherjee while replying to the debate on the Bill had said that the first stages of arbitration would be a high-level committee chaired by the governor of the RBI. "If two regulators claim jurisdiction over the same product and if they are unable to resolve it, it will not come to the joint mechanism automatically. I have expressed my intention publicly and I have also made the institutional amendment," Mr Mukherjee had said.— Moneylife Digital Team