Financial Stability and Development Council (FSDC)

About Financial Stability and Development Council (FSDC):

• It is an apex-level forum constituted by the Government of India in December 2010.
• Status: FSDC is not a statutory body. No funds are separately allocated to the council for undertaking its activities.
• Objective: Strengthening and institutionalizing the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.
• Composition:
  • It is chaired by the Union Finance Minister of India.
  • Its members include the heads of financial sector Regulators (RBI, SEBI, PFRDA, IRDA & FMC) Finance Secretary and/or Secretary, Department of Economic Affairs, Secretary, Department of Financial Services, and Chief Economic Adviser.
  • The Council can invite experts to its meeting if required.
• Functions:
  • It monitors macroprudential supervision of the economy, including the functioning of large financial conglomerates.
  • It addresses inter-regulatory coordination and financial sector development issues.
  • It also focuses on financial literacy and financial inclusion.
• Sub-committee of FSDC: 
  • A sub-committee of FSDC has also been set up under the chairmanship of Governor RBI. 
  • It discusses and decides on a range of issues relating to financial sector development and stability, including substantive issues relating to inter-regulatory coordination.

Q1) What are Macroprudential policies?

Macroprudential policies are financial policies aimed at ensuring the stability of the financial system as a whole to prevent substantial disruptions in credit and other vital financial services necessary for stable economic growth.

Source: Nirmala Sitharaman chairs the 27th meeting of Financial Stability and Development Council, watch!