Financial Stability and Development Council

Basic Facts:

  • The Central Government had established Financial Stability and Development Council (FSDC) in December 2010 with the Finance Minister as it Chairman.
  • The idea to create it was first mooted by the Raghuram Rajan Committee on Financial Sector Reforms in 2008.
  • It is a super regulatory body for regulating financial sector which is a vital for bringing healthy and efficient financial system in the economy.
  • The FSDC envisages to strengthen and institutionalise mechanism of
    1. Maintaining financial stability,
    2. Financial sector development,
    3. Inter-regulatory coordination along with monitoring macro-prudential regulation of economy.

 

Composition of FSDC

Chairman: Union Finance Minister.

Members:

  • Heads of the financial sector regulatory authorities (i.e, RBI, SEBI, IRDA, PFRDA),
  • Finance Secretary and/or Secretary, Department of Economic Affairs (Union Finance Ministry), Secretary, Department of Financial Services, and Chief Economic Adviser.
  • FSDC can invite experts to its meeting if required.
  • Changes: The Union Government has reconstituted Financial Stability and Development Council (FSDC) to include secretaries from revenue department as well as Ministry of Information Technology (MeitY).

 

Two Core functions

  • Act as an apex level forum to strengthen and institutionalize the mechanism for maintaining financial stability.
  • Enhance inter-regulatory coordination and promoting financial sector development in the country.

 

Other functions

  • Focus on financial literacy and financial inclusion.
  • Monitor macro-prudential supervision of the economy.
  • Assess the functioning of the large financial conglomerates.