New Delhi:  The Centre has finally approved the formation of a commission that will rewrite and clean up the financial sector laws in the country.

The need for the commission was strongly felt, as old legislation has become complex, lengthy and ambiguous after several amendments. 

The government set up Financial Sector Legislative Reforms Commission (FSLRC) that will rewrite and clean up the financial sector laws in the country.

Finance Minister Pranab Mukherjee had in Budget 2010-11, announced the setting up of FSLRC to review and simplify financial sector laws and bring these in tune with the current requirements.

According to the notification issued, the 10-member commission will be headed by Justice BN Srikrishna. Dhirendra Swaroop has been appointed as the co-ordinator of the panel and C K G Nayar would be its Secretary.

The mandate of the Commission is to rewrite legislation focusing on broad principles and evolve a common set of principles for the governance of regulatory institutions in the financial sector. It will also examine a case for greater convergence of regulation and streamline the regulatory architecture of financial markets.

As part of financial sector reforms in India, an apex-level Financial Stability and Development Council (FSDC) was also set up in 2010 to strengthen and institutionalise the mechanism for maintaining financial stability. The council was mandated to undertake macro-prudential supervision of the economy and address issues related to inter-regulatory co-ordination.

The government had, earlier proposed two sub-committees, one on regulatory coordination chaired by the Reserve Bank of India Governor and the other, on financial stability, headed by the Finance Secretary.

However, after RBI raised concerns, the government after changing its structure said there would be only one sub-committee headed by the Central Bank Governor. It also replaced the High Level Coordination Committee on Financial Markets.

The government has asked the FSLRC to submit its recommendations within 24 months.