In News:

• Recently, the 26^th meeting of Financial Stability and Development Council (FSDC) was chaired by the Union Finance Minister.
• During the meeting, FM emphasised the importance of continuous risk monitoring in the financial sector so that necessary action can be taken to mitigate any vulnerability on time.
• The FM also reviewed financial sector issues that can be taken up during India's G20 Presidency in 2023. 

What’s in today’s article:

• About FSDC
• News Summary

Financial Stability and Development Council (FSDC):

• About:
  • It is an apex-level body constituted by the Government of India (not a statutory body) in 2010.
  • It has been established under the Financial Stability Division of the Department of Economic Affairs (DEA), Ministry of Finance.
• Background:
  • Following the global financial crisis of 2008, governments and organisations all over the world were under pressure to regulate their economic assets.
  • In 2008, the Raghuram Rajan Committee first advocated the creation of a super regulatory autonomous entity to deal with macro prudential and financial irregularities in India's entire financial system in 2008.
  • As a result, the FSDC is considered as India's endeavour to better prepare for future events.
• Composition:
  • Chairperson: The Union Finance Minister of India. The Chairperson may invite any person whose presence is deemed necessary for any of its meetings.
  • Members:
    • Governor Reserve Bank of India (RBl),
    • Finance Secretary and/or Secretary, Department of Economic Affairs (DEA),
    • Secretary, Department of Financial Services (DFS),
    • Secretary, Ministry of Corporate Affairs,
    • Secretary, Ministry of Electronics and Information Technology,
    • Chief Economic Advisor, Ministry of Finance,
    • Chairmans of regulatory bodies like Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA), Insolvency and Bankruptcy Board of India (IBBI).
  • Secretary of the Council: Additional Secretary, DEA, Ministry of Finance.
• Responsibilities or functions: There are no funds set aside for the council to carry out its duties.
• 
• Concern and way ahead:
  • Because FSDC is led by the Union Finance Minister, the authority of the RBI and other regulators is feared to be jeopardised.
  • As a result, the autonomy of sectoral regulators must be safeguarded and functional guidelines must be designed to handle this issue. 

News Summary - Deliberations at the FSDC’s 26th meeting:

• The meeting takes place at a time when key central banks are aggressively raising interest rates to contain runaway inflation, and the conflict in Ukraine continues to threaten both inflation and growth forecasts.
• According to an official statement issued following the meeting, the FSDC discussed early-warning indicators for the economy and readiness to deal with them.
• It was noted that the Government and regulators must continuously monitor financial sector risks, financial conditions, and market developments so that appropriate and timely action can be taken to mitigate any vulnerability and strengthen financial stability.
• It also discussed improving the efficiency of existing financial and credit information systems, governance and management issues in systemically important financial institutions, strengthening the financial sector's cyber security framework, and so on.
• At the same time, the meeting discussed issues such as power sector financing, the strategic role of the GIFT international financial services centre and inter-regulatory cooperation.