- SDC is an apex-level body that was set by the government of India in order to create a super regulatory body. Its establishment was first recommended by the Raghuram Rajan Committee in 2008.
- In 2010, Pranab Mukherjee (the then Finance Minister of India) decided to set up this autonomous body to deal with macro prudential and financial regularities of the entire financial sector in India. It is not a statutory body. No funds are allocated separately to the council to undertake its activities.
- In order to strengthen and institutionalize the mechanism of maintaining financial stability, to enhance inter-regulatory coordination and to promote financial sector development, FSDC was set up as the apex level forum in December 2010.
- This council is considered as India’s initiative to be better conditioned in preventing any economic crisis in future.
- Sitharaman proposed a Rs 6 lakh crore National Monetisation Pipeline (NMP) in August, with the goal of unlocking value in infrastructure assets ranging from power to roads and railroads.
- The council also discussed the Insolvency and Bankruptcy Code (IBC) proceedings, banks’ exposure to various industries and the government, government data sharing systems, the internationalisation of the Indian Rupee, and pension-related problems.
- Sources also said that the finance minister may ask financial sector regulators to relax and harmonise investment norms for instruments like infrastructure investment trusts (InvITs) to be used to monetise public assets like highways, power and railway tracks.
- Finance Minister Nirmala Sitharaman presided over the Financial Stability and Development Council’s (FSDC) 24th meeting on Friday at Vigyan Bhawan in New Delhi. The meeting was held to address the health of the financial sector and a strategy for assisting the pandemic-affected economy’s embryonic recovery.
- Secretaries and members of the Financial Stability and Development Council (FSDC) attended the meeting on Friday, September 3rd, in addition to Finance Minister Nirmala Sitharaman and Union Minister Of State For Finance Pankaj Chaudhary.
- According to a Finance Ministry statement, attendees discussed the FSDC’s various mandates, including financial stability, financial sector development, inter-regulatory coordination, financial literacy, financial inclusion, and macro-prudential supervision of the economy, including the functioning of large financial conglomerates.
- During the FSDC conference, it was mentioned that the government and other regulators need to maintain a constant eye on the financial situation.
- The Financial Stability and Development Council reviewed issues such as stressed asset management, institutional strengthening for financial stability analysis, financial inclusion, and the framework for financial institution resolution, among other things.
- The FSDC also took note of the activities undertaken by the council’s sub-committee, which is chaired by RBI Governor Shaktikanta Das, and the action taken by members on the past decisions of FSDC, according to the Ministry of Finance.
- The development of the financial sector plays an important role in relaxing the restrictions on external financing of firms and, hence, in promoting economic growth.
- The development of the financial sector plays an important role in relaxing the restrictions on external financing of firms and, hence, in promoting economic growth. The development of the stock market is positively correlated with economic growth in the long term.
- The FSDC is expected to review various aspects associated with the stimulus packages announced by the government to tide over the economic crisis induced by the pandemic.
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