India and China: A tale of two financial sector reforms

Both countries have sought to refashion regulations this year but Beijing has comprehensively moved more swiftly 

- SUBHOMOY BHATTACHARJEE

In a remarkable coincidence, both China and India have outlined plans ulations in 2023.

These plans have become even more significant in the wake of the convulsions expected in the global financial market with the sudden collapse of the Silicon Valley Bank (SVB). The changes come as Beijing tries to impose more controls on capital outflows, regulate spiralling debt and thus restrict "risky" practices as the economy braces for a long struggle against the US.

Typically, India has given a lead time for the plan, which is expected to be incremental and spread out over more than a year.

China, on the other hand, has been drastic and given no warning to investors abroad that such a plan was in the works. The concerns for India are more internal, to ramp up the financial sector to support new sectors such as financial technology (fintech) and roll in digital currency.

This month, China has announced that a new National Financial Regulatory Administration (NFRA) will replace the current China Banking and Insurance. Regulatory Commission (CBIRC). The NFRA will also cut into the role of the central bank, the People's Bank of China, to bring the supervision of the industry, excluding the securities sector, into a body directly under the State Council, or cabinet.

Along with the NFRA, the China Securities Regulatory Commission, too, will come under the direct administration of the State Council. It will assume responsibility for reviewing corporate bond issuance from the National Development and Reform Commission - the country's planning body.