Page 14 - India Insurance Report 2023- BIMTECH

2 India Insurance Report - Series II

Regulatory Craft : Changing Dynamics

- G N Bajpai
1 Former Chairman SEBI & LIC, Author and Columnist

Liberalisation, globalisation and free play of market forces have given rise to independent regulatory
bodies. They are obligated to regulate the markets, protect the interests of investors and, in the case of
India, develop the markets.

The regulators, especially in India, are a special creation of law. They have powers to legislate (like
Parliament) subordination legislations-regulations, are authorised to execute (like Political Executive)
and in case of dispute-adjudicate (like judiciary). In effect, a Mini State! In a Nation-state, such powers
vest in three independent authorities, and work as checks and balances.

The methodology practised in the objective discharge of their duties is termed ‘Regulatory Craft’.
The creation of a level playing field and elimination of subjectivity has made the independence and
autonomy of the regulators a necessity. Accordingly, legislations, e.g., SEBI Act, IRDA Act, PFRDA
Act & RBI Act etc., have been enacted outlining the broad framework of authority and autonomy.

Financial markets are influenced and shaped by a variety of factors emanating from social trends,
political tides, economic models, technological advancements and concern for ecology, et el.. Visualising
shaping of future financial markets to be regulated warrants deciphering the developments in all these
areas and more that create a fusion, which eventually shapes the markets.

1. The Emerging Trends

1.1. Social

Covid-19 rattled the social systems, institutional framework and forms of governance. The past
educates the present, and economic choices are made within but influenced by historical, cultural and
institutional contexts. Trust in a democratic political system warrants a common purpose and egalitarian
imperatives, which are moulded by narratives. Social isolation and disruption during Covid-19 have led
to a clash of beliefs, cultures and philosophies and prompted individuals to insist on recognising their
identities. They proclaim, albeit vicariously, ‘I am ME & not WE.’ In fact, new narratives are transforming
the matrix of social systems.