Financial Stability and Development Council (FSDC) is an apex-level body constituted by the

government of India The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...

. The idea to create such a super

regulatory body A regulatory agency (regulatory body, regulator) or independent agency (independent regulatory agency) is a government authority that is responsible for exercising autonomous dominion over some area of human activity in a licensing and regulatin ...

was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India,

Pranab Mukherjee Dr. Pranab Mukherjee (11 December 193531 August 2020) was an Indian politician and statesman who served as the 13th president of India from 2012 until 2017. In a political career spanning five decades, Mukherjee was a senior leader in the India ...

, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India. An apex-level FSDC is not a statutory body. The recent global economic meltdown has put pressure on governments and institutions across the globe to regulate their economic assets. This council is seen as

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...

's initiative to be better conditioned to prevent such incidents in future. The new body envisages to strengthen and institutionalise the mechanism of maintaining

financial stability Financial stability is a property of a financial system that dissipates financial imbalances that arise endogenously in the financial markets or as a result of significant adverse and unforeseeable circumstances. When stable, the system absorbs ...

financial sector development Financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and reduce poverty. The Financial sector is the set of institutions, instruments, and markets. ...

, inter-regulatory coordination along with monitoring macro-prudential regulation' of

economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...

. No funds are separately allocated to the council for undertaking its activities. Union Minister for Finance & Corporate Affairs Smt.

Nirmala Sitharaman Nirmala Sitharaman (born 18 August 1959) is an Indian economist and politician serving as the Minister of Finance and Corporate Affairs of India since 2019. She is a member of the Rajya Sabha, upper house of the Indian Parliament, since 2014. S ...

chaired the 26th meeting of the Financial Stability and Development Council (FSDC) on September 15, 2022.

Composition of the council

*Chairperson: The Union Finance Minister of India *Members: **Governor

Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible for ...

(RBl), **Finance Secretary and/ or Secretary, Department of Economic Affairs (DEA), **Secretary, Department of Financial Services (DFS), **Secretary, Ministry of Corporate Affairs, **Secretary, Ministry of Electronics and Information Technology, **Chief Economic Advisor, Ministry of Finance, **Chairman,

Securities and Exchange Board of India The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive ...

(SEBI), **Chairman,

Insurance Regulatory and Development Authority The Insurance Regulatory and Development Authority of India (IRDAI) is a regulatory body under the jurisdiction of Ministry of Finance , Government of India and is tasked with regulating and licensing the insurance and re-insurance industrie ...

(IRDA), **Chairman,

Pension Fund Regulatory and Development Authority Pension Fund Regulatory and Development Authority is the regulatory body under the jurisdiction of Ministry of Finance , Government of India for overall supervision and regulation of pension in India. The Government of India had, in the year 199 ...

(PFRDA), **Chairman,

Insolvency and Bankruptcy Board of India The Insolvency and Bankruptcy Board of India (IBBI) is the regulator for overseeing insolvency ''proceedings'' and entities like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India. It w ...

(IBBI), *Additional Secretary, Ministry of Finance, DEA, will be the Secretary of the Council, *The Chairperson may invite any person whose presence is deemed necessary for any of its meetings.

Responsibilities

*Financial Stability *Financial Sector Development *Inter-Regulatory Coordination *Financial Literacy *Financial Inclusion *Macro prudential 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 The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...

(FATF),

Financial Stability Board The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. It was established after the G20 London summit in April 2009 as a successor to the Financial Stability Forum ...

(FSB) and any such body as may be decided by the Finance Minister from time to time. The institutional structure for India’s Financial Inclusion/ Literacy programme is unique as it has an apex body in the Financial Stability and Development Council (FSDC), headed by the Finance Minister of Government of India, mandated, inter alia, to focus on attaining financial inclusion/ literacy goals.

Structural and Functional changes

*To Entrust it with the tasks of existing regulators i.e. RBI, IRDA, SEBI, PFRDA. *The Council shall have a sub-committee headed by the Governor, RBl. The sub-committee will replace the existing High Level Coordination Committee on Financial Markets. Sectoral regulators’ autonomy to be protected. Guidelines prepared on functioning of the Financial Stability and Development Council (FSDC), a high-level body set up to sort out inter-regulatory issues, will define the role of the finance ministry and how member regulators’ autonomy is not compromised. FSDC was formed to bring greater coordination among financial market regulators. The council is headed by the finance minister and has the Reserve Bank of India (RBI) governor and chairpersons of the Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority as other members along with finance ministry officials. RBI and other regulators had earlier feared that their autonomy was at stake as FSDC was headed by the finance minister herself. After the assurance of FM, this fear was set to rest but functional guidelines was supposed to address this issue.

References

External links

{{DEFAULTSORT:Financial Stability And Development Council Government agencies of India Great Recession Financial regulatory authorities of India Regulatory agencies of India