UPSC Prelims 2016 Question:

With reference to ‘Financial Stability and Development Council’, consider the following statements:

1. It is an organ of NITI Aayog. 
2. It is headed by the Union Finance Minister. 
3. It monitors macroprudential supervision of the economy.
   
   

Which of the statements given above is/are correct?

Explanation: 

• Financial Stability and Development Council (FSDC) was set up by the Central Government as the apex level forum in December 2010. The FSDC was created by the recommendation of The Raghuram Rajan committee (2008). 

• • FSDC was created under the Ministry of Finance constituted by the Executive Order in 2010. So, statement 1 is not correct.
    
    

• The Chairman of the Council: Union the Finance Minister. So, statement 2 is correct.

• Members of the council: 

1) Heads of financial sector Regulators (RBI, SEBI, PFRDA, IRDA) 

2) Finance Secretary and/or Secretary, Department of Economic Affairs/ Financial services

3) Chief Economic Adviser 

4) The Council can invite experts to its meeting if required. 

• The sub-committee of FSDC is headed by the RBI Governor.
• The FSDC monitors macro prudential supervision of the economy, including functioning of large financial conglomerates. It addresses inter-regulatory coordination and financial sector development issues. It also focuses on financial literacy and financial inclusion. So, statement 3 is correct.
  
  

Therefore, option (3) is the correct answer.

Subject: Economics | Public Finance