Recent Steps by RBI and SEBI
RBI (May 2025) and SEBI (Feb 2025) announced new rules for how they will create regulations.
Both now promise to:
Do impact analysis (RBI).
State the objective of rules (SEBI).
Invite public feedback for 21 days.
Review old regulations from time to time.
What More is Needed
1. Explain the Economic Reason
Regulations should clearly say:
What problem they solve.
What market failure they address.
Other countries like the U.S. and EU already require:
Cost-benefit analysis.
Checking for better alternatives.
Current issue: RBI and SEBI don’t clearly explain why a regulation is needed or what it fixes.
IFSCA (another Indian regulator) already does this better.
2. Be More Accountable
Between 2014–2015, only:
2.4% of RBI’s circulars had public input.
Less than 50% of SEBI’s regulations did.
Regulators should publish every year:
How many rules had public consultation.
How many suggestions were accepted or rejected.
Reasons for accepting or rejecting.
How feedback changed the rules.
Timeline for each step.
SEBI sometimes hides public feedback, saying it's confidential.
3. Regular Reviews
Regulators must define how often they’ll review rules.
IFSCA reviews every 3 years.
Regular checks are needed to see if rules still solve the problem.
Bigger Solutions Needed
Lack of capacity and fragmented reforms are challenges.
A national law — like the U.S. Administrative Procedure Act — can:
Standardise rule-making.
Make impact analysis, public consultation, and reviews mandatory.
What Other Countries Do
U.K. and Canada already have such rule-making guidelines.
India should also adopt this system to ensure transparent and accountable regulations.
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