UPSC Exam Preparation: Topic of the Day – Financial Stability and Development Council
Drawing from the idea of Raghuram Rajan Committee (2008) to create a super-regulatory body for the financial sector, in 2010 it was decided to set up Financial Stability and Development Council (FSDC), an autonomous body dealing with macroprudential and financial regularities in the entire financial sector of India. Financial Stability and Development Council is an apex-level body constituted by the Government of India. The apex-level FSDC is not a statutory body.
- The body envisages to strengthen and institutionalize the mechanism of maintaining financial stability, financial sector development, inter-regulatory coordination along with monitoring macro-prudential regulation of the economy.
- It must be noted that no funds are separately allocated to the council for undertaking its activities.
- The finance minister is the chairman of the council.
- It 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.
- The decision has now been taken by the Union Government to reconstitute the body and include secretaries from revenue department as well as Ministry of Information Technology (MeitY). It will also include Chairman of the Insolvency and Bankruptcy Board of India.
- The reconstitution would make FSDC more broad-based to incorporate changes in the economic regulatory framework of the country
Responsibilities of FSDC
- Bringing about stability in the financial sector
- Development of Financial Sector
- Inter-regulatory coordination
- 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.
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