Financial Stability and Development Council (FSDC)

Financial Stability and Development Council (FSDC)

Subject – Economy

Context – The Financial Stability and Development Council (FSDC) on Friday discussed measures to manage stressed assets and noted the need to keep a continuous vigil by the government and all regulators on the financial conditions.

Concept –

• The Financial Stability and Development Council (FSDC) is a non-statutory apex council under the Ministry of Finance constituted by the Executive Order in 2010.
• The Raghuram Rajan committee (2008) on financial sector reforms first proposed the creation of FSDC.

Composition:

• It is chaired by the Finance Minister and its members include the heads of all Financial Sector Regulators (RBI, SEBI, PFRDA& IRDA), Finance Secretary, Secretary of Department of Economic Affairs (DEA), Secretary of Department of Financial Services (DFS), and Chief Economic Adviser.
• In 2018, the government reconstituted FSDC to include the 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.

Functions:

• The objective of FSDC is to strengthen and institutionalize the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.
• It also intends to monitor macro-prudential supervision of the economy. It will assess the functioning of the large financial conglomerates.

Responsibilities of FSDC

• Bringing about stability in the financial sector
• Development of the Financial Sector
• Coordination of Inter-Regulatory bodies
• Promoting financial literacy
• Ensuring financial inclusion
• Macroprudential supervision of the economy including the functioning of large financial conglomerates.
• Coordinating India’s international interface with financial sector bodies like the Financial Action Task Force (FATF), Financial Stability Board (FSB) and any such body as may be decided by the Finance Minister from time to time.