Financial Stability and Development Council (FSDC)

• The seventeenth Meeting of the Financial Stability and Development Council (FSDC) was recently held in New Delhi under the Chairmanship of the Union Minister of Finance.
• The Council discussed the issues and challenges facing the Indian economy and Members agreed on the need to keep constant vigil and be in a state of preparedness of managing any external and internal vulnerabilities.
• FSDC took note of the developments and progress made in setting up of Computer Emergency Response Team in the Financial Sector (CERT-Fin) and Financial Data Management Centre and discussed measures for time bound implementation of the institution building initiative.

About FSDC:

• Financial sector regulation is a vital service for bringing healthy and efficient financial system in the economy. There are different regulators for various segments of financial sectors, like the RBI for commercial banks and NBFCs, SEBI for capital market etc.
• At the same time, there should be coordination among these financial sector regulators to ensure better efficiency as well as for avoiding overlapping of functions. For this, the Government has formed the Financial Stability and Development Council in December 2010, with the Finance Minister as the Chairman. The immediate impulse for the establishment of the FSDC was the tussle between SEBI and IRDA on the regulation of ULIPs.
• The FSDC was envisaged for performing two sets of core functions. First is to perform as an apex level forum to strengthen and institutionalize the mechanism for maintaining financial stability. Second is for enhancing inter-regulatory coordination and promoting financial sector development in the country.

Composition of FSDC

• The Chairman of the Council is the Finance Minister and its members include the heads of financial sector Regulators (RBI, SEBI, PFRDA, IRDA & FMC {now with SEBI}) Finance Secretary and/or Secretary, Department of Economic Affairs, Secretary, Department of Financial Services, and Chief Economic Adviser. The Council can invite experts to its meeting if required. The FSDC Secretariat is in the Department of Economic Affairs.
• The council will act as a co-ordination agency between the various financial sector regulators- the RBI, SEBI, IRDA and the PFRDA. This Council would monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, and address inter-regulatory coordination issues.

Function of the FSDC:

• It will focus on financial literacy and financial inclusion.
• It aims strengthening and institutionalizing the mechanism of financial stability and development.
• It will monitor macro-prudential supervision of the economy. It will assess the functioning of the large financial conglomerates.
• It will address intra regulatory coordination issues.

By: Vishal