FSDC to be set up in December: Govt
The government today said the Financial Stability and Development Council (FSDC) would be set up next month to sort out inter-regulatory issues and prevent financial mess.
"The Council is expected to come into force in the month of December 2010," Minister of State for Finance Namo Narain Meena said in a written reply to Rajya Sabha.
He further said that the objectives of FSDC would be to deal with financial stability, financial sector development, inter-regulatory coordination, financial literacy, financial inclusion and macroprudential supervision of the economy, including the functioning of large financial conglomerates.
Besides, it would coordinate the country's international interface with financial sector bodies such as the Financial Action Task Force (FATF) and Financial Stability Board (FSB).
"The Ministry of Finance has consulted all the financial sector regulators on the formation of the council," Meena added.
Financial sector regulators like SEBI, RBI, PFRDA and IRDA would be members of FSDC.
Recently, Finance Minister Pranab Mukherjee had said that FSDC would not act as super regulator. The Minister's response was meant to assuage bank regulator RBI's concerns, as the latter feared the proposed FSDC would breach its autonomy.
To smoothen its apprehensions, the Finance Ministry has decided to make RBI Governor head of a sub-committee of the proposed FSDC.
Mukherjee in his Union Budget address had proposed to set up FSDC with the explicit intention of strengthening and institutionalising the mechanism for maintaining financial stability.
After the 2008 banking crisis threatened the global financial stability, similar bodies have been established in several other countries, including Financial Stability Oversight Council in the United States.
