Government to go ahead with financial sector super regulator plan
12 October 2010
The central government has decided to go ahead with the creation of a Financial Stability & Development Council (FSDC), which aims to strengthen and institutionalise a mechanism for maintaining financial stability and development.
Finance minister Pranab Mukherjee announced this after a meeting with the sector regulators and officials of the ministry of finance.
The finance ministry had earlier circulated a discussion paper on the issue to all stake holders for which suggestions were also received.
He said the FSDC would not encroach the turf or autonomy of other regulators and would engage in macro prudential supervision of the economy, including the functioning of large financial conglomerates and address inter-regulatory coordination issues.
It will also focus on financial literacy and financial inclusion.
The FSDC will also look into issue relating to financial development from time to time. It would have one sub-committee, which would be headed by the governor of the Reserve Bank of India (RBI).
FSDC will have its secretariat in the department of economic affairs of the finance ministry.
The Reserve Bank of India was opposed to the idea of a financial sector as it feared the super regulator would usurp much of its powers and cause policy divergence.