Focus: GS III- Indian Economy
Why in News?
Recently, the Union Minister of Finance and Corporate Affairs chaired the 26th Meeting of the Financial Stability and Development Council (FSDC).
Highlights:
- The council placed a strong emphasis on issues such as improving the effectiveness of the current financial and credit information systems, early warning indicators for the economy and how prepared we are to deal with them, and governance and management concerns in systemically important financial institutions.
- It was underlined that the government and authorities must continuously evaluate the financial sector’s risks, financial conditions, and market developments in order to take prompt, appropriate action to reduce any vulnerabilities and strengthen financial stability.
- The council noted the planning for the financial sector concerns that will be discussed during India’s 2023 G20 Presidency.
About Financial Stability Development Council (FSDC)
- The Financial Stability and Development Council (FSDC) was constituted by an Executive Order of the Union Government as a non-statutory apex body under the Ministry of Finance in 2010.
- The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008.
- No funds are separately allocated to the council for undertaking its activities.
- The FSDC was formed to bring greater coordination among financial market regulators.
About Composition of the FSDC
The membership of the FSDC is are as discussed below;-
- The Finance Minister is the Chairman of the FSDC.
- 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 (SEBI), Insurance Regulatory and Development Authority (IRDA) and Pension Fund Regulatory and Development Authority (PFRDA) as other members along with finance ministry officials.
- Other members are Finance Secretary, Chief Economics Advisor and Secretary of the Department of Financial Services.
About Functions and Responsibilities of the FSDC
- The FSDC was formed to bring greater coordination among financial market regulators.
- To strengthen and institutionalize the mechanism of maintaining financial stability and responsibilities of FSDC as shown in the below image
