KOCHI, India: A top official of the Reserve Bank of India (RBI) has called for necessary changes in laws to allow sharing of confidential information on regulated entities with foreign regulators as mooted by the Financial Stability Board (FSB) to prevent future financial crisis.

“There is a need for some amendment to the law so that it will provide legal authority to share confidential information with other regulators subject to conditions and safeguards,” said Shyamala Gopinath, the deputy governor of India’s central bank.

The FSB, successor to the Financial Stability Forum (FSF), was established in April 2009 following the Group of 20 (G20) London summit and includes all major economies, FSF members, Spain and the European Commission.

The FSB wants information-sharing among the regulators of the member countries to help develop adequate contingency plans against any future financial crisis and India is one of its members.

“Sharing of information among regulators could raise some concerns of legal risks for want of exclusive legislative banking. This becomes more onerous when it comes to sharing of information with overseas regulators,” she said while inaugurating an international symposium on “changing dynamics of legal risks in financial sector” organized by the RBI here on Friday.

Stressing the importance of legal audit in all financial institutions to review various agreements with the custodians, counterparties and service providers, she said it was important in the light of various developments in the fast changing financial markets during the recent crisis.

“The importance of legal audit in all financial institutions cannot be overemphasized,” she said. “It’s a health check of the level of risk that could arise due to insufficient or inappropriate documentation or lack of understanding laws of a foreign land. It also helps in identifying legal risks and suggesting course correction for smoother sailing during the crisis.”