COMPANY LAW
| Irda, Sebi get reminder to park surplus with government Thu, 19 Aug 2010 22:51:12 GMT |
| The Economic Times Irda, Sebi get reminder to park surplus with government NEW DELHI: The finance ministry has asked market regulator Sebi and insurance watchdog IRDA to deposit their surplus funds with the government, a move that may be resisted by these bodies citing regulatory autonomy. The directive follows repeated suggestions by the Comptroller and Auditor General (CAG) of India, the government’s statutory auditor, which says this will improve the regulators’ accountability to the exchequer. “It is just a matter of principle,” a senior finance ministry official said. “Public expenditure needs parliamentary approval. So we have insisted that they deposit their income in the Consolidated Fund,” he said, adding that the regulators are free to use the money anyway after they gets legislative sanction. Sebi and IRDA had resisted earlier attempts by the government to make them park their income and surplus funds in government accounts. About Rs 1,800 crore of surplus funds generated by financial sector regulators through fees and penalties on companies are parked in their respective accounts at present. The finance ministry has directed the chief controller of accounts to open a new accounting head to keep the funds from regulators and evolve a method for transferring them into the public accounts. “To avoid any dispute, we have taken advice from the law ministry, which has supported our stand,” the finance ministry official said, adding that under Article 266 of the Constitution money collected by the regulatory authorities should be submitted towards the government account. The government’s move assumes significance as this comes at a time when it has floated a discussion paper on the setting up of a Financial Stability Development Council (FSDC), an inter-regulatory agency. Earlier this month, the Parliament had passed the Securities and Insurance Laws (Amendment and Validation) Bill, 2010, which provides for a statutory body under the finance minister to resolve disputes between financial sector regulators. The Parliamentary standing committee on finance and the CAG have highlighted the issue in their earlier reports. The issue first surfaced in 2001 when the finance ministry asked Sebi to transfer funds to government accounts and get its expenditure vetted by Parliament. In 2002, the ministry asked asked IRDA to follow the procedure. In January 2005, the department of economic affairs in the finance ministry directed all ministries and government departments to ensure that funds of regulatory bodies are maintained in the Public Accounts. The CAG tried to address these concerns in an earlier audit report in 2006-07. “The apprehensions of the regulatory authorities that there could be compromise of their autonomy, if their receipts are credited to the government account and expenditure met out of the budgetary appropriations, are unfounded in the light of the status obtaining in respect of similarly placed organisations abroad and the practice of maintaining accounts of the constitutional and independent authorities like judiciary, UPSC, CAG, CERC, TRAI and Election Commission as a part of Government accounts,” the report said. In a 2008 report, the CAG pulled up interim pension fund regulator PFRDA, electricity regulator Central Electricity Regulatory Commission and Petroleum & Natural Gas Regulatory Board for keeping their funds outside public accounts. “The finance accounts of the Union government, therefore, do not present a correct and complete picture of government finances to the extent of funds of Rs 1,747.37 crore lying outside government accounts,” the CAG said in its report on Union government accounts for 2008-09. |
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