Financial Stability and Development Council (FSDC)

The Financial Stability and Development Council (FSDC) was set up by the Government of India in 2010, under the chairmanship of the finance minister. Its primary objective is to ensure financial stability, regulate coordination, promote financial sector development, and encourage financial literacy and inclusion. The Council acts as a super-regulatory body that facilitates communication and coordination among financial regulators in the country. It also serves as a platform for addressing systemic risks and emerging challenges in the financial sector.

Role of FSDC

The FSDC has a wide range of responsibilities that contribute to the stability and growth of the Indian financial sector. Its primary responsibilities are as follows:

• Systemic Oversight: The FSDC is responsible for overseeing the overall stability and resilience of the Indian financial system. The Council monitors risks and vulnerabilities in the financial system and takes appropriate measures to mitigate them.
• Regulatory Coordination: The FSDC ensures effective coordination among various financial regulators in the country. It facilitates information sharing and joint decision-making among regulators, which helps in addressing regulatory gaps and promoting consistency in regulations.
• Financial Sector Development: The FSDC plays a crucial role in promoting the development of the Indian financial sector. It identifies areas of the financial sector that require improvement and suggests measures to promote growth and development. The Council also recommends reforms in the financial sector to the government.
• Financial Literacy and Inclusion: The FSDC is responsible for promoting financial literacy and inclusion among the masses. It develops strategies and programs that educate people about financial products and services and encourages them to access formal financial channels.

Role of the Sub-Committee

The FSDC sub-committee, chaired by the Governor of the Reserve Bank of India (RBI), acts as the operational arm of the Council. The sub-committee comprises of members from various financial regulators in the country, including the Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA), and the Ministry of Finance.

The sub-committee has several responsibilities, including:

Regulatory Coordination

The sub-committee facilitates coordination among financial regulators in the country. It acts as a forum for exchanging information and views on regulatory issues and coordinates regulatory actions to address emerging challenges.

Crisis Management

The sub-committee plays a critical role in crisis management in the financial sector. It provides a platform for regulators to discuss and coordinate responses to crises in the financial sector.

Policy Formulation

The sub-committee contributes to the formulation of policies related to the financial sector. It provides expert advice to the government on financial sector policies and recommends regulatory changes to promote financial stability and growth.