GS 3: Economy | Mobilization of resources

Why in News?

• The 19th Meeting of the Financial Stability and Development Council (FSDC) to review the current global and domestic economic situation and financial sector performance was held
• Highlights of the Meet:
• The Council discussed at length the issue of real interest rate, current liquidity situation, including segmental liquidity position in NBFCs and mutual fund space.
• The Council decided that the Regulators and the Government would keep a close watch on the developing situation and take all necessary measures.

Cyber Security:

• FSDC took note of the developments regarding strengthening of Cyber Security in Financial Sector.
• It included progress made towards setting up of a Computer Emergency Response Team in the Financial Sector (CERT-Fin) under a Statutory Framework.
• The Council also deliberated on the need for identifying and securing critical information infrastructure in financial sector.

Cryptocurrency:

• The Council also deliberated on the issues and challenges of Crypto Assets/Currency and decided to devise an appropriate legal framework to ban use of private crypto-currencies in India.
• The panel encouraging the use of Distributed Ledger Technology, as announced in the Budget 2018-19.

Other discussions:

• Other issues discussed include market developments and financial stability implications of the use of RegTech and SupTech (IT enabled regulatory process) by Financial Firms and Regulatory and Supervisory Authorities.
• It also discussed implementing the Recommendations of the Sumit Bose Committee Report on measures, such as, promoting appropriate disclosure regime for financial distribution costs.
• Financial Stability and Development Council (FSDC):
• FSDC is an apex-level body constituted by the Government of India to create a super regulatory body as mooted by the RaghuramRajan Committee in 2008.
• Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.
• An apex-level FSDC is not a statutory body. No funds are separately allocated to the council for undertaking its activities.

Responsibilities:

• Financial Stability
• Financial Sector Development
• Inter-Regulatory Coordination
• Financial Literacy
• Financial Inclusion
• Macro prudential 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) and any such body as may be decided by the Finance Minister from time to time.