FSDC discusses IBC, stressed assets, financial inclusion

Context:

The Financial Stability and Development Council (FSDC) discussed measures to manage stressed assets and noted the need to keep a continuous vigil by the government and all regulators on the financial conditions.

Relevance:

GS-III: Indian Economy 

Dimensions of the Article:

1. About Financial Stability and Development Council (FSDC)
2. Composition of the council
3. Responsibilities of the FSDC

About Financial Stability and Development Council (FSDC)

• Financial Stability and Development Council (FSDC) is an apex-level body constituted by the government of India in 2010, by the then Finance Minister of India (not a Statutory body).
• The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008.
• The idea behind FSDC was to set up an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.
• 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’s initiative to be better conditioned to prevent such incidents in future.
• The body envisages to strengthen and institutionalise the mechanism of maintaining financial stability, financial sector development, inter-regulatory coordination along with monitoring macro-prudential regulation’ of economy.

Composition of the council: 

1. The Union Finance Minister of India (Chairperson)
2. Ministry of Finance, DEA (Secretary)
3. Governor Reserve Bank of India RBI
4. Finance Secretary and/ or Secretary, Department of Economic Affairs DEA
5. Secretary, Department of Financial Services DFS
6. Secretary, Ministry of Corporate Affairs
7. Secretary, Ministry of Electronics and Information Technology
8. Chief Economic Advisor, Ministry of Finance
9. Chairman, Securities and Exchange Board of India SEBI
10. Chairman, Insurance Regulatory and Development Authority IRDA
11. Chairman, Pension Fund Regulatory and Development Authority PFRDA
12. Chairman, Insolvency and Bankruptcy Board of India IBBI

Responsibilities of the FSDC

• Bringing about stability in the financial sector
• Development of the Financial Sector
• Coordination of Inter-Regulatory bodies 
• Promoting financial literacy
• Ensuring financial inclusion
• Macroprudential 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 (FATF), Financial Stability Board (FSB) and any such body as may be decided by the Finance Minister from time to time.

-Source: The Hindu