FSDC UPSC Relevance
- GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
FSDC India: Context
- Recently, the 25th meeting of the Financial Stability and Development Council (FSDC) was held under the chairpersonship of Union Finance Minister.
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Financial Stability and Development Council: Key points
- The Council deliberated on the various mandates of the FSDC and major macro-financial challenges arising in view of global and domestic developments.
- The Council noted that Government and all regulators need to maintain 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.
- The Council discussed measures required for further development of the financial sector and to achieve an inclusive economic growth with macroeconomic stability.
What is FSDC?
- FSDC is a non-statutory apex level forum to strengthen and institutionalize the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development in the country.
- It has been established in 2010 under the Ministry of Finance.
- It has been set up on the recommendation of Raghuram Rajan Committee (2008) on financial sector reform, in the backdrop of the global economic crisis of 2008.
FSDC council composition
- FSDC council chairman: Union Finance Minister
- FSDC members include
- the heads of financial sector Regulators (RBI, SEBI, PFRDA, IRDA & FMC)
- Finance Secretary and/or Secretary, Department of Economic Affairs, Secretary, Department of Financial Services, and Chief Economic Adviser.
FSDC functions
The various responsibilities of FSDC are listed below
- The council focusses on financial literacy and financial inclusion in the country.
- FSDC aims to strengthen and institutionalize the mechanism of financial stability and development.
- It also monitors macro-prudential supervision of the economy.
- The council assess the functioning of the large financial conglomerates.
- It also addresses intra regulatory coordination
FSDC Sub Committee
- The FSDC Sub-committee has been set up under the chairmanship of Governor, RBI.
- It meets more often than the full Council.
- All the members of the FSDC are also the members of the Sub-committee.
- Additionally, all four Deputy Governors of the RBI and Additional Secretary, DEA, in charge of FSDC, are also members of the Sub Committee.
- As a result of the deliberations of the Sub-Committee of the FSDC, the following technical groups/working groups have been set up
- Technical Group on Financial Inclusion and Financial Literacy.
- Inter Regulatory Technical Group.
- Inter regulatory forum for monitoring financial conglomerates (IRF-FC)
- Early Warning Group
- Working Group on resolution regime for financial institutions
- Macro Financial and Monitoring Group.
Economy Notes for UPSC