The Financial Stability and Development Council (FSDC) meeting held

The Financial Stability and Development Council (FSDC) meeting held

Part of: GS-Prelims and GS-III – Economy

In News:

• Recently, The Financial Stability and Development Council (FSDC) meeting was held through video conferencing. 
• The meeting was chaired by the Indian Finance Minister. 

Key takeaways 

• It was noted that the COVID-19 pandemic poses a serious threat to the stability of the global financial system since its impact and timing of recovery was still uncertain. 
• It highlighted the need for the government and regulators to remain vigilant on financial conditions that could expose systemic vulnerabilities. 
• It also assured that the government and regulators would continue to provide liquidity and capital support to domestic financial institutions.
• Liquidity and solvency positions of non-banking financial companies, housing finance companies and micro-finance institutions were reviewed. 

Important value additions 

The Financial Stability and Development Council (FSDC) 

• It is a non-statutory apex council under the Ministry of Finance. 
• It was constituted by the Executive Order in 2010.
• Its constitution was proposed by the Raghuram Rajan committee (2008) on financial sector reforms. 
• 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)
  • Chief Economic Adviser
  • Minister of State 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)
  • Revenue Secretary.
• The Council can invite experts to its meeting if required. 
• Objectives:
  • To strengthen and institutionalize the mechanism for maintaining financial stability
  • Enhancing inter-regulatory coordination
  • Promoting financial sector development
  • Assess the functioning of the large financial conglomerates.