Financial services Current Affairs

Government invites comments for creating new Financial Redressal Agency

The Union Government has invited public comments on a report for the creation of a Financial Redressal Agency (FRA).

The report also calls for a new financial consumer protection and redressal legislation and also recommends an initial budget of Rs. 100 crore for the setting up of the FRA.

Key Facts
  • The objective of FRA will be to address the grievances of retail consumers against all financial service providers in an easy, transparent and cost-effective manner.
  • It will offer a simplified resolution process to allow retail consumers in distant and remote locations to pursue effective remedies without imposing significant costs on them.
  • FRA will try to resolve all complaints through mediation. Cases where parties are unable to reach a settlement will be resolved through a light-touch adjudication process.
  • It will establish a front-end presence in diverse locations for consumers to submit complaints and discourage court-like processes.
Why there is need for FRA?

There are substantial inadequacies in the current redressal system. The average consumer is put under unnecessary stress as he has to approach different redress agencies based on nature of product. This stress is further amplified due to varying levels of consumer protection across regulators. In some instances, regulated financial service providers (FSPs) are not covered within the scope of the concerned regulator’s redress functions. Further, there is a lack of powers to award compensation in some cases, pushes consumers to courts or consumer forums. Even the present systems do not have a specialised cadre of redress professionals and there is possibility of a conflict of roles between the various redressal agencies.

Background

Union Finance Minister Arun Jaitley in his 2015-16 budget speech had announced creation of a sector-neutral FRA, following the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC). The FSLRC in 2013 had recommended an FRA as part of the regulatory framework aimed at fostering customer protection and regulator independence and accountability.

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BNP Paribas to acquire broking firm Sharekhan

French global financial services group Banque Nationale de Paris (BNP) Paribas to acquire retail brokerage firm Sharekhan at about 2,000 crore rupees.

BNP Paribas a key player in retail brokerage and digital banking services that have over 1.7 million patrons in Europe is one of the largest bank in the world. This acquisition would help BNP Paribas to expand its footprint in India.

Sharekhan India’s second largest stock broker portal for online trading and stock marketing has over 575 branches in India. It accounts seven per cent market share in online trading market of India with 1.2 million clients.

Henceforth Sharekhan will participate in service like brokerage, asset-based investment services, mutual funds and savings products.

About Sharekhan:

Sharekhan incorporated in 1995, was formerly known as SSKI Investor Services. It started offering broking services to non-institutional clients in 2000. The Mauritius equity firm Baring Private Equity Asia IV holds 12 per cent stake in Sharekhan.

About BNP Paribas:

BNP and Paribas initially were two separate French banks which were incorporated in 1848 and 1872 respectively, and came together in 2000 forming as a world’s third largest bank. Its presence in India is since 1860, established its first branch in Kolkata and is second oldest bank in India after SBI (1806) and now expanded to prominent cities of India.

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