Finance Minister Arun Jaitley Saturday said as an economy evolves, regulation needs to be relaxed or altered keeping in the mind the ground situation.
Speaking at an IDFC event here, he said governments increasingly get opportunities to interact with various stakeholders.
For any regulatory mechanism, the stakeholder consultation has to be of very high quality, which will probably lead to a revisiting of the traditional thoughts and opinions, he noted.
"That's why if you have seen, several regulators now publish their approach papers, tentative drafts, they hold hearings, meet individuals, meet groups of stakeholders together and improve upon what's being said," he observed.
"I think...now that we are evolving as an economy, where all regulation needs to be relaxed or needs to be altered depending on the ground situation, I think this would be quite useful in the whole process," he said.
His observations assume significance in the light of RBI Deputy Governor Viral Acharya's comments Friday pitching for "effective independence" of the central bank.
Citing the examples of economic turbulence in Argentina and Turkey, Acharya had said governments that do not respect the central bank's independence would sooner or later incur the wrath of financial markets.
In recent months, the RBI and the government have been apparently differing on certain issues, such as those pertaining to payment systems regulator and Prompt Corrective Action (PCA) norms for banks.
The Finance Minister further said the Insolvency and Bankruptcy Code (IBC) is helping the banking sector in cleaning up bad loans.
The fear of IBC has made defaulters approach their bank and clear their dues, he said.
"The unintended consequence (of IBC) was that potential defaulters started realising that the moment you cross the red line, at least you will go out and never get back.
"And if you have seen the last quarter or two, potential defaulters are begging, borrowing and stealing and paying back. And that's why the banks have started getting monies even outside the NCLT system from potential defaulters not wanting to cross the red line..., " he said.
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