Financial Stability and Development Council

  • September 16, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Financial Stability and Development Council

Subject: economy

26th meeting of the Financial Stability and Development Council (FSDC) held under the Chairpersonship of Union Finance Minister Smt. Nirmala Sitharaman.

Details:

  • It underscored the need for continuous monitoring of risks in the financial sector and also deliberated on:
    • improving the efficiency of the existing financial and credit information systems
    • issues of governance and management in systemically important financial institutions
    • strengthening cyber security framework in the financial sector
    • common KYC for all financial Services
    • issues relating to the financing of the power sector
    • the strategic role the GIFT international financial services centre can play

Financial Stability and Development Council (FSDC)

  • It is a non-statutory apex council under the Ministry of Finance constituted by the Executive Order in 2010. 
  • It is established as an autonomous body dealing with macroprudential and financial regularities in the entire financial sector of India. 
    • The Raghuram Rajan Committee (2008) on financial sector reforms first proposed the creation of FSDC.
  • Composition of FSDC:
    • Chairperson: The Union Finance Minister of India.
    • Members of FSDC include Heads of the Financial Sector Regulators listed below:
      • Reserve Bank of India (RBI)
      • Insurance Regulatory and Development Authority (IRDA)
      • Securities and Exchange Board of India (SEBI)
      • Pension Fund Regulatory and Development Authority (PFRDA)
    • Other members are Finance Secretary, Secretary of Department of Financial Services (DFS), and Chief Economic Adviser.
    • The government reconstituted the FSDC to include the following Members in the Council: 
      • Minister of State responsible for the Department of Economic Affairs (DEA),
      • Secretary of Department of Electronics and Information Technology,
      • Chairperson of the Insolvency and Bankruptcy Board of India (IBBI) and
      • The Revenue Secretary.
    • FSDC sub-committee is headed by the Governor of RBI.
    • The Council can invite experts to its meeting if required.
  • Aims and Objectives: 
    • To strengthen and institutionalise the mechanism of maintaining financial and macroeconomic stability.
    • To enhance inter-regulatory coordination and promote financial sector development.
    • It also focuses on financial literacy and financial inclusion.
    • Coordinating India’s international interface with financial sector bodies such as the Financial Action Task Force (FATF) and Financial Stability Board (FSB).
  • Functions:
    • To strengthen and institutionalize the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.
    • To monitor macro-prudential supervision of the economy. It assesses the functioning of the large financial conglomerates.
economy Financial Stability and Development Council