On the lines of the Financial Stability Oversight Council (FSOC) of United States, the Government of India in its Budget of 2010-11 had announced that a Financial Stability Development Council (FSDC) will be established in the country with explicit intention of strengthening and institutionalizing the mechanism for maintaining financial stability and enhancing inter-regulatory coordination.
Chairman & Members of the FSDC:
The Chairman of the Council is the Finance Minister of India and its members include the heads of the financial sector regulatory authorities, Finance Secretary and/or Secretary, Department of Economic Affairs (DEA), Secretary, Department of Financial Services, and the Chief Economic Adviser.
Objectives of FSDC:
To deal with the issues that related to
- 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 such as the Financial Action Task Force (FATF) and Financial Stability Board (FSB).
Does FSDC Curb the autonomy of Regulators?
The FSDC has not been established for curbing the autonomy of regulators. Instead this Council would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates. It will address inter-regulatory coordination issues and thus spur financial sector development. It will also focus 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. Under the aegis of FSDC, two empowered Technical Groups have been formed viz. Technical Group on Financial Literacy and Financial Inclusion and Inter-Regulatory Technical Group.