Does India need a super-regulator for financial stability?

Sources:
The Hindu: A super regulator for financial stability
Business Standard: RBI ideally placed to address financial stability issues; FSDC not a super regulator: Pranab; Paper on FSDC soon: Pranab
RBI: Financial Stability Report
Livemint.com: Regulating financial stability

In an effort to enhance the stability of the financial sector, the Indian government plans to establish an "apex-level" Financial Stability and Development Council ("FSDC") which will "monitor macro prudential supervision of the economy." In the Budget speech last month, the Finance Minister Pranab Mukherjee explained that the FSDC would monitor large financial conglomerates and coordinate inter-regulatory issues. In addition, the FSDC will deal with the matters relating to financial literacy and financial inclusion.

Currently, there are four major regulators in India - the Reserve Bank of India ("RBI"), the Securities and Exchange Board of India ("SEBI"), the Insurance Regulatory and Development Authority ("IRDA") and the Pension Fund Regulatory and Development Authority ("PFRDA"). Since 1992, the High Level Coordination Committee on Financial Markets ("HLCC") has attempted to coordinate inter-regulatory issues among them. The Governor of the RBI is the chair for the committee. The RBI, in its first issue of the Financial Stability Report said that the FSDC answered "a felt need for an institutional mechanism in the post-crisis scenario to pre-empt build-up of systemic risks with potentially huge costs." It also said that it would be important to define the relationship between the FSDC and the existing HLCC.

Those who oppose the establishment of the FSDC argue that the RBI has been already implementing similar roles of the proposed FSDC. The RBI has been quite successful in protecting the Indian economy from the impact of the global financial crisis. Although the Finance Minister emphasizes that the FSDC is not a super regulator, they worry that it may eventually act like one. Also, they point out that the super regulator approach under the Financial Services Authority in the U.K. has not been effective during the global financial crisis.

Last week, the Finance Minister emphasized that the FSDC would not impair the autonomy and independence of existing regulators and only focus on what the existing regulators have not done so far. He also said that the government would publish a paper which would provide information about how the FSDC would work.

Discussion Questions:
1. How could the FSDC effectively achieve its objective of coordinating inter-regulatory issues among regulators without undermining the autonomy of existing regulators?
2. Does India need a super regulator?
3. What should be the relationship between the FSDC and the HLCC?