The Financial Stability and Development Council (FSDC)

The Financial Stability and Development Council (FSDC) is an apex-level body set up by the Government of India in December 2010. It was established on the recommendation of the Raghuram Rajan Committee (2008) to strengthen and institutionalize the mechanism for maintaining financial stability, enhancing inter-regulatory coordination, and promoting financial sector development.

Key Points about FSDC:

Chairperson: The Union Finance Minister.

Members: Includes heads of all financial sector regulators –

Reserve Bank of India (RBI)

Securities and Exchange Board of India (SEBI)

Insurance Regulatory and Development Authority of India (IRDAI)

Pension Fund Regulatory and Development Authority (PFRDA)

Finance Secretary, Economic Affairs Secretary, Revenue Secretary, Expenditure Secretary, and Chief Economic Adviser.

Objectives:

Maintain financial stability in India’s economy.

Strengthen inter-regulatory coordination between financial regulators (RBI, SEBI, IRDAI, PFRDA, etc.).

Monitor macro-prudential supervision of the economy.

Address financial sector development issues.

Promote financial literacy and inclusion.

Ensure financial sector reforms are implemented smoothly.

Sub-committee:

A Sub-Committee of FSDC is chaired by the Governor of RBI.

It focuses on technical and operational issues of coordination between regulators.

Importance:

Helps in preventing financial crises by monitoring systemic risks.

Improves cooperation among regulators to deal with complex financial products.

Plays a role in policy making for financial inclusion and literacy.

Provides a platform for resolving inter-regulatory disputes.