The Thirteenth Meeting of the Financial Stability and Development Council (FSDC) was held today under the Chairmanship of the Union Minister of Finance, Arun Jaitley.
On this occasion, Dr. Arvind Subramanian, Chief Economic Adviser (CEA) gave an overview of the state of macro-economy highlighting important issues.
Members agreed on the need to continue to be in a state of full preparedness for managing any external sector vulnerabilities.
The Council deliberated on the issue of rising bank NPAs and corporate sector balance sheet stress wherein it noted the measures taken by Government & RBI for handling the stressed assets.
The Council noted that high volatility in the financial markets is one of the most prominent risks confronting the Emerging Market Economies (EMEs). However, India appears to be much better placed today on the back of improvement in its macro-economic fundamentals and large forex reserves, which provides cushion against financial market volatility.
It also discussed the impact of Bank NPAs and corporate sector balance sheet stress on Bond market.
FSDC was apprised of further action/proposed action on the recommendations of the task forces set up by DEA on PDMA (Public Debt Management Agency), FSAT (Financial Sector Appellate Tribunal), FDMC (Financial Data Management Centre) and Resolution Corporation (RC).
The Government had constituted in December 2014 an Inter-ministerial Group (IMG) for identifying gaps in the existing regulatory framework for deposit taking activities .
The IMG has recently submitted its report to the Government. FSDC was apprised of the salient features of the report.
The Council was updated about the merger of FMC with SEBI and the current status of harmonization and convergence of regulations relating to securities market and commodity derivatives market.
FSDC was apprised of the latest developments at the Financial Stability Board (FSB) & Financial Action Task Force (FATF), and about India’s participation in these international bodies.