Financial Stability and Development Council (FSDC) & Sub-Committee

Background

• Constituted: 2010 by then Finance Minister Pranab Mukherjee.

• Idea Origin: Raghuram Rajan Committee (2008) on financial sector reforms recommended a super-regulatory body for systemic risk management.

• Nature: Apex-level body to oversee macro-prudential regulation and financial stability.

• Not a statutory body (no separate funds allocated).

• Context of creation: Global Financial Crisis (2007–08) → need for stronger financial stability mechanisms.

Composition of FSDC

Chairperson: Union Finance Minister.

Members:

• Governor, RBI

• Finance Secretary &/or Secretary, Department of Economic Affairs (DEA)

• Secretary, Department of Financial Services (DFS)

• Secretary, Ministry of Corporate Affairs

• Secretary, Ministry of Electronics & IT

• Chief Economic Adviser (CEA)

• Chairpersons of SEBI, IRDAI, PFRDA, IBBI

• Additional Secretary (DEA) as Secretary of the Council

• Special invitees as deemed necessary.

Responsibilities of FSDC

1. Financial Stability – monitoring risks & preventing crises.

2. Financial Sector Development – deepening capital markets, insurance, pensions.

3. Inter-Regulatory Coordination – resolving overlaps between RBI, SEBI, IRDAI, PFRDA.

4. Macro-Prudential Supervision – oversight of large financial conglomerates.

5. Financial Inclusion & Literacy – unique mandate compared to global counterparts.

6. Coordination of India’s interface with global financial bodies – FATF, FSB, IMF, etc.

Structural & Functional Aspects

• Sub-Committee of FSDC (FSDC-SC):

  • Headed by Governor, RBI.

  • Replaced the High-Level Coordination Committee on Financial Markets.

  • Focuses on operational issues, inter-regulatory coordination, and monitoring systemic risks.

• Regulators’ autonomy protected – FSDC provides coordination, not control.

32nd Meeting of FSDC Sub-Committee 

• Venue: Reserve Bank of India, Mumbai.

• Chair: Shri Sanjay Malhotra, Governor, RBI.

Key Discussions:

1. Global & Domestic Macroeconomic Developments – impact of trade uncertainty & geopolitical frictions.

2. Inter-Regulatory Issues:

   • Simplification of KYC processes.

   • Special drives for financial inclusion.

   • Review of State-Level Coordination Committees (SLCCs).

   • Activities of various technical groups.

3. National Strategy for Financial Inclusion (NSFI) 2025–30 – deliberated.

4. Commitment: Enhance financial sector resilience through coordination.

Significance

• Strengthens India’s macro-prudential framework against financial shocks.

• Addresses regulatory fragmentation across multiple agencies.

• Supports financial inclusion goals through national strategies.

• Provides early warning mechanism for systemic risks.

• Enhances India’s credibility in global financial governance (FATF, FSB).