Financial Sector Legislative Reforms Commission (FSLRC)
The Financial Sector Legislative Reforms Commission (FSLRC) was a government-appointed body that submitted its 2013 report proposing a comprehensive overhaul of India's fragmented financial sector laws and the creation of a unified financial regulatory architecture.
India's financial sector at the time of the FSLRC's constitution in 2011 was governed by a patchwork of laws, some dating to the colonial era, spread across multiple regulators: the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), and the Forward Markets Commission (FMC), among others. The commission, chaired by Justice B.N. Srikrishna, was tasked with reviewing and harmonising this fragmented framework.
The FSLRC's 2013 report proposed replacing approximately 60 existing laws with a single unified financial code. At its heart was the concept of a unified Financial Regulatory Agency (FRA) that would subsume SEBI, IRDAI, PFRDA, and FMC under one roof, leaving RBI to focus solely on monetary policy, banking regulation, and systemic risk. A separate Resolution Corporation was proposed to handle orderly wind-down of failing financial firms. A Financial Redressal Agency would handle consumer complaints across all sectors through a single-window system.
The commission introduced a principles-based regulatory philosophy: rather than prescribing detailed rules, regulations would articulate high-level objectives — consumer protection, market development, systemic stability — leaving regulators discretion in implementation. This represented a significant philosophical shift from India's historically rule-based approach.
The report was controversial. Critics argued that combining regulators with different institutional cultures under one roof risked regulatory capture and loss of specialised expertise. RBI resisted proposals that would strip it of debt management functions. Industry participants were uncertain about transition costs. Successive governments reviewed but did not fully implement the recommendations.
Partial implementation occurred nonetheless. The FMC was merged into SEBI in 2015, reducing the regulatory alphabet by one entity. The Indian Financial Code drafted pursuant to FSLRC recommendations circulated in revised form through the mid-2010s but did not proceed to enactment. The Insolvency and Bankruptcy Code (2016) drew conceptually from FSLRC's resolution thinking, even if institutional structure differed.
The FSLRC remains significant as the most ambitious attempt to rethink India's financial regulatory architecture. Its ideas on consumer protection, regulatory governance, and judicial accountability for regulators have influenced subsequent policy debates even where formal legislative adoption stalled.