The finance ministry is having a relook at the entire financial sector regulations and legislations to determine how they compare with the global standards.

The ministry, in association with the three regulators in the financial sector, has formed three technical groups to look into the current legislations, benchmark them against the best global pratices, review the regulatory framework and suggest improvements in the current practices for each sector.

The Reserve Bank of India [Get Quote] will spearhead the apex committee -- the Financial Sector Assessment Group -- which, in turn, would have three separate sub-committees for banking, insurance and capital markets.

The committee on insurance met last week in Hyderabad at the Insurance Regulatory and Development Authority office.

Stating the reasons behind the mammoth exercise, a member in one of the technical groups said, "The purpose is to assess India's ability to participate in the international financial markets. The status report will help lending agencies take decisions on investing in India. Lending agencies want to know the financial stability of the country. Normally, the IMF (International Monetary Fund) and the World Bank conduct audits of markets all over the world. Several countries do the ratings internally. This time, India is carrying out the exercise internally. So an expert committee with the help of the respective regulators has been formed to look into each of the sectors."

"It is basically an exercise to assess the level of maturity of the financial sector. The groups will review the regulatory framework, benchmark the legislative framework against the best global practices, see if there are sufficient, well-defined rules, whether they are being monitored, status and implementation of the financial standards and codes of insurance companies, compare the financial standards in India with those in the world and suggest ways to bring them on a par," said a member of the insurance committee.

"Its seven years since the insurance regulations were framed, so the committee will look into the reporting formats, information which needs to be imparted to the public beyond the data that are submitted to the Irda, solvency, pricing of products and how many insurance companies can fail. The overall health of the insurance sector will be assessed," added another financial sector expert.

In three months, the audit report of the three sectors will be submitted to the RBI.