First, financial system is still characterised by considerable fragmentation of legislation, regulation and enforcement. Second, policy related frictions might arise from the diversity of different legislations and the overlapping of the regulatory jurisdictions. Third, there might be a risk of legal arbitrage among financial jurisdictions.
A need has been continuously felt to rewrite and streamline the financial sector laws, rules and regulations and to bring them in harmony with the requirements of India’s fast growing financial sector. The current legislations were drafted in the contemporaneous setting and have had to be amended from time to time to incorporate changes in the milieu.