The Financial Stability and Development Council (FSDC) on Thursday observed that there is a need to monitor financial sector risks, financial conditions and market developments on a continuous basis by the Government and the regulators so that appropriate and timely action can be taken to mitigate any vulnerability and strengthen financial stability.
This observation comes in the backdrop of rising global interest rates, tightening financial conditions, volatility in emerging market currencies, fears of recession in advanced economies, domestic retail inflation for August rising to 7 per cent from 6.71 per cent in July and industrial production growth decelerating to a four-month low of 2.4 per cent in July (11.5 per cent in July 2021).
FSDC was set up by the Government in December 2010 as an apex level forum to strengthen and institutionalise the mechanism for maintaining financial stability, enhance inter-regulatory coordination and promote financial sector development.
At the 26 Meeting of FSDC, which was chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman in Mumbai, the Council deliberated on the early warning Indicators for the economy and its preparedness to deal with them.
Improving efficiency
The Council also discussed aspects relating to improving the efficiency of the existing financial/credit information systems, issues of governance and management in systemically important financial institutions (including financial market infrastructures), strengthening cyber security framework in financial sector, common KYC for all financial services and related matters, and update on account aggregator and next steps.
FSDC also took stock of issues relating to financing of power sector, strategic role of GIFT IFSC, inter-regulatory Issues of GIFT-IFSC, and need for utilisation of the services of registered valuers by all Government Departments, per a Finance Ministry statement.
The Council also took note of the preparation in respect of financial sector issues to be taken up during India’s G20 Presidency in 2023.
The meeting was attended by the Ministers of State in the Finance Ministry -- Bhagwat Kishanrao Karad and Pankaj Chaudhary; RBI Governor Shaktikanta Das; four Secretaries in the Finance Ministry -- TV Somanathan, Ajay Seth, Tarun Bajaj and Sanjay Malhotra; V. Anantha Nageswaran, Chief Economic Adviser, Ministry of Finance; Madhabi Puri Buch, Chairperson, Securities and Exchange Board of India; among others.