Financial Stability and Development Council (FSDC) - UPSC Notes

The Financial Stability and Development Council (FSDC) is an autonomous body constituted by the Government of India. UPSC Aspirants should be aware of the topics related to Finance and Economics in order to score more marks in the IAS Exam

Financial Stability and Development Council (FSDC) can be related to Indian Economy of the General Studies Paper 3 in the UPSC Syllabus.  Indian economy/Economics is part of both the UPSC Prelims Syllabus and the UPSC Mains Syllabus. Also, Economics is an optional subject choice in the IAS Mains exam. This highly relevant and scoring subject often poses a challenge to IAS aspirants, as they find it hard to make notes balancing both the static and dynamic components of the topics.

FSDC UPSC Notes:- Download PDF Here

Financial Stability and Development Council – Latest Update

The 22nd meeting of the Financial Stability and Development Council was held through video conferencing. The Finance Minister chaired the meeting to review issues relating to market volatility, capital flows in the country in the wake of the Covid-19 pandemic, domestic resource mobilization, and the nation-wide lockdown imposed to contain the pandemic.

The topic, ‘FSDC’ is important for Indian Polity subject (Mains GS-II) of the IAS Exam. Read about the composition, appointment, functions, and more in this article.

What is Financial Stability and 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 Raghuram Rajan Committee (2008) on financial sector reforms first proposed the creation of FSDC.

FSDC – Council Members

The membership of the FSDC is discussed below.

  • The Finance Minister is the Chairman of the FSDC.
  • Members of FSDC include Heads of the Financial Sector Regulators listed below:
  • Other members are Finance Secretary, Chief Economics Advisor and  Secretary of the Department of Financial Services.

FSDC Member Reforms 

The government reconstituted the FSDC to include the following Members in the Council: 

  • Minister of State responsible for the Department of Economic Affairs (DEA)
  • Secretary of the Department of Electronics and Information Technology
  • Revenue Secretary
  • Chairman of the Insolvency and Bankruptcy Board of India (IBBI)

The reconstitution would make FSDC more broad-based to incorporate changes in the economic regulatory framework of the country.

Aspirants can go through important links provided in the table below for comprehensive preparation-

Functions of FSDC

The Financial Stability and Development Council was established as an autonomous body dealing with macroprudential and financial regularities in the entire financial sector of India. 

  • 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.   

Responsibilities of FSDC

The FSDC’s responsibilities are listed below:

  1. Bringing about stability in the financial sector
  2. Development of the Financial Sector
  3. Coordination of Inter-Regulatory bodies 
  4. Promoting financial literacy
  5. Ensuring financial inclusion
  6. Macroprudential supervision of the economy including the functioning of large financial conglomerates.
  7. 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.

Candidates must know about important Government Bodies like the Financial Stability and Development Council-

Read about similar constitutional, statutory or quasi-judicial bodies, on the linked page.

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