Finance Minister Nirmala Sitharaman reviewed the state of the economy and discussed various Budget-related suggestions and proposals in the meeting of the Financial Stability and Development Council (FSDC).

She will present the first Budget of Modi 2.0 government on July 5 against the backdrop of India’s economy hitting a five-year low growth of 6.8 per cent in 2018-19.

Financial sector regulators, including RBI governor Shaktikanta Das, SEBI chairman Ajay Tyagi, and IRDAI chief Subhash Chandra Khuntia, and top finance ministry officials were present at the meeting.

The council reviewed the current global and domestic economic situation and financial stability issues, including those concerning banking and NBFCs. The council was apprised of the progress made towards setting up of the Financial Data Management Centre (FDMC) to facilitate integrated data aggregation and analysis as also a Computer Emergency Response Team (CERT-Fin) towards strengthening the cybersecurity framework for the financial sector.

The council also took note of the activities undertaken by the FSDC sub-committee chaired by the RBI governor and the action taken by members on the decisions taken in earlier meetings of the council.

What is the FSDC?

Financial sector regulation is vital for ensuring a healthy and efficient financial system. There are different regulators for various segments of financial sectors, like the RBI for commercial banks and NBFCs, SEBI for capital markets.

At the same time, there should be coordination among these financial sector regulators to ensure better efficiency as well as for avoiding overlapping of functions. For this, the government formed the Financial Stability and Development Council in December 2010, with the finance minister as the chairperson.

Basically, the activity of the council is to coordinate financial and economic regulations through consultations of the heads of the various regulatory organisations.

Members of FSDC

The chairman of the council is the finance minister and its members include the heads of financial sector regulators (RBI, SEBI, PFRDA and IRDAI) finance secretary, secretary of economic affairs, secretary of financial services and chief economic adviser.

The council can invite experts to its meeting if required.

The FSDC secretariat is in the department of economic affairs. In May 2018, the council was expanded to include top bureaucrats related to economic and financial management. As a result, the total number of members has increased to 12, besides the finance minister. Following are the members of the FSDC after the reconstitution…

* RBI governor

* SEBI chairman

* IRDA chairman

* PFRDA chairman

* Insolvency & Bankruptcy Board of India · chairperson

* Minister of State responsible for the department of economic affairs

* Secretary, department of electronics and information technology

* Revenue secretary

* Finance secretary, department of economic affairs

* Secretary, department of financial services

* Secretary, ministry of corporate affairs

* Chief Economic Adviser

Functions of the FSDC

* Focus on financial literacy and financial inclusion.

* Aims to strengthen and institutionalise the mechanism of financial stability and development.

* Monitor macro-prudential supervision of the economy.

* Assess the functioning of large financial conglomerates.

* Address intra-regulatory coordination issues.

Other wings within the FSDC

There are a few other regulatory wings within the FSDC created for specific purposes: the inter-regulatory technical group, technical group on financial inclusion and financial literacy, inter-regulatory forum for monitoring financial conglomerates, early warning group, working group on resolution regime for financial institutions and the macro financial and monitoring group.