New Delhi: Finance minister Pranab Mukherjee on Tuesday said the central government would soon establish a Financial Stability and Development Council (FSDC) to oversee the economy’s supervision, forge regulatory coordination where needed and address challenges relating financial development and inclusion.
FSDC would be headed by the finance minister and include heads of four financial services regulators and officials from the finance ministry. Talking to the media after meeting with heads of the four financial services regulators and finance ministry officials in the morning, Mukherjee said Tuesday’s meeting was a follow up to the last union budget announcement to set up FSDC.
”It was agreed that with a view to strengthen and institutionalize the mechanism for maintaining financial stability and development, the central government would set up the apex council,” a finance ministry statement said on Tuesday’s meeting.
The regulators had been invited to share their views on the subject. Prior to Tuesday’s meeting, the finance ministry had circulated a discussion paper among regulators to garner views.
The finance ministry media statement said FSDC would have one sub-committee which would be headed by the governor of the Reserve Bank of India (RBI). The ministry statement did not detail the role of the sub-committee to be headed by the RBI governor.
The announcement on the structure of FSDC was different as compared to the finance ministry’s original discussion paper. The FSDC discussion paper recommended two sub-committees. One, the financial sector regulatory coordination committee (FSRCC) and the other, financial sector stability committee (FSSC).
FSRCC was to have been modelled on the current high-level coordination committee on financial markets (HLCCFM), which is headed by the RBI governor. The discussion paper proposed that FSRCC meet at least once in three months.
The functions of HLCCFM would be subsumed by FSDC’s scope. According to a finance ministry official, who did not want to be named, going forward FSDC would envelope all of the HLCCFM’s roles. The finance ministry would act as the secretariat for FSDC, the media statement, said.