Financial Stability and Development Council

Why in news?

• Recently, the Union Minister of Finance and Corporate Affairs chaired the 26th Meeting of the Financial Stability and Development Council (FSDC).

About Financial Stability and Development Council:

• 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.

Members of the FSDC:

• The Finance Minister is the Chairman of the FSDC.
• Members of FSDC include heads of the Financial Sector Regulators listed below:
  • Reserve Bank of India (RBI)
  • Insurance Regulatory and Development Authority (IRDA)
  • Securities and Exchange Board of India (SEBI)
  • Pension Fund Regulatory and Development Authority (PFRDA)
• Other members are Finance Secretary, Chief Economic Advisor, Chairman of the Insolvency and Bankruptcy Board of India, Revenue Secretary etc.

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

• Bringing about stability in the financial sector
• Development of the Financial Sector
• Coordination of Inter-Regulatory bodies
• Promoting financial literacy
• Ensuring financial inclusion
• Macroprudential supervision of the economy including the functioning of large financial conglomerates.
• Coordinating India’s international interface with financial sector bodies like the Financial Action Task Force (FATF), Financial Stability Board (FSB) etc.

PRACTICE QUESTION

Which of the following statements are correct regarding ‘Financial Stability and Development Council’?

1. The council is chaired by Union Finance Minister

2. It is statutory body that functions under Ministry of Commerce and Industry

3. It deals with macro prudential and financial regularities in the entire financial sector of India

Select the correct answer using the code given below:

(a) 1 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 3 only

Answer