25th Meeting of Financial Stability and Development Council held in Mumbai

What is the News?

The 25th meeting of the Financial Stability and Development Council (FSDC) was held under the Chairpersonship of the Union Finance Minister.

The Council noted that the Government and all regulators need to maintain a constant vigil on the financial conditions and functioning of important financial institutions, especially considering that it could expose financial vulnerabilities in the medium and long term.

What is the Financial Stability and Development Council(FSDC)?

FSDC is a non-statutory apex level body 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 of FSDC

Chaired by: Union Finance Minister

Members: It includes 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 as members.

The Council can also invite experts to its meeting if required.

FSDC Sub-Committee: It is headed by the Governor of RBI.

The mandate of FSDC:

– To strengthen and institutionalize the mechanism for maintaining financial stability and enhance inter-regulatory coordination and promote financial sector development.

– To monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination and financial sector development issues. 

– To focus on financial literacy and financial inclusion.

Source: This post is based on the article “25th Meeting of Financial Stability and Development Council held in Mumbai” published in PIB on 23rd February 2022.