Maintain constant vigil on financial sector, work to achieve inclusive growth: FM Nirmala Sitharaman to regulators

The high-level FSDC headed by Finance Minister Nirmala Sitharaman on Tuesday deliberated on the challenges emanating from global and domestic developments and asked the regulators to maintain constant vigil on the financial sector.

The Financial Stability and Development Council (FSDC) meeting attended by various financial sector regulators, including RBI Governor Shaktikanta Das, comes against the backdrop of rising tension between Russia and the US over Ukraine.

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The Council also discussed measures required for further development of the financial sector and to achieve an inclusive economic growth with macroeconomic stability.

"The Council deliberated on the various mandates of the FSDC and major macro-financial challenges arising in view of global and domestic developments.

"The Council noted that the government and all regulators need to maintain constant vigil on the financial conditions and functioning of important financial institutions, especially considering that it could expose financial vulnerabilities in the medium and long-term," the finance ministry said in a statement.

The Council discussed measures required for further development of the financial sector and to achieve an inclusive economic growth with macroeconomic stability, it said.

The 25th FSDC meeting discussed operational issues relating to currency management and also took note of the activities undertaken by the FSDC Sub-Committee chaired by the RBI Governor and the action taken by members on the past decisions of FSDC.

The meeting was also attended by Minister of State for Finance Bhagwat Kishanrao Karad, Finance Secretary T V Somanathan, Economic Affairs Secretary Ajay Seth, Revenue Secretary Tarun Bajaj, Financial Services Secretary Sanjay Malhotra, and Securities and Exchange Board of India chairman Ajay Tyagi among others.

This was the first meeting of the high-level panel after the presentation of Budget 2022-23. The previous meeting was held on September 3 last year.

The FSDC has been set up by the government in consultation with financial market regulators, to strengthen and institutionalize the mechanism for maintaining financial stability, enhance inter-regulatory coordination and promote financial sector development.

Without prejudice to the autonomy of regulators, the Council monitors macro-prudential supervision of the economy, including functioning of large financial conglomerates, and addresses inter-regulatory coordination and financial sector development issues. It also focuses on financial literacy and financial inclusion.