The standout regulator controversy was the turf war between the Insurance Regulatory and Development Authority (Irda) and the Securities and Exchange Board of India (Sebi) over the unit-linked insurance plans (Ulips), the popular hybrid mutual-fund-cum-insurance products. It was a battle that was avidly followed as much for its significance as the personalities of J Harinarayan of Irda and C B Bhave of Sebi, both former bureaucrats. In some ways, it also demonstrated the point that in India, the question of regulator “autonomy” is ephemeral at best. The Union finance ministry set a cat among the pigeons by using the Sebi-Irda tussle to pass an ordinance increasing its own regulatory powers over the Reserve Bank of India. A non-plussed and beleaguered RBI regained ground when former RBI governors cried foul and came to the central bank’s support. The soft spoken RBI Governor Duvvuri Subbarao voiced widely-shared fears about central bank autonomy and North Block backed off a bit, but not fully. The RBI-FinMin saga is yet to fully play out.
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