Guidelines being prepared on functioning of the Financial Stability and Development Council(FSDC), a high-level body set up to sort out inter-regulatory issues, will define the role of the finance ministry and how member regulators’ autonomy is not compromised.
FSDC was formed to bring greater coordination among financial market regulators. The council is headed by the finance minister and has the Reserve Bank of India (RBI) governor and chairpersons of the Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority as other members along with finance ministry officials.
According to information, the finance ministry’s role could be confined to an improving level of financial literacy and inclusion as well as devise means for doing this job, apart from being the lender of the last resort.A broad thrust of the guideline will also on FSDC handling only broader issues and ensuring that sectoral regulators continue to play their role as regulating and developing respective markets. In the first meeting of the council on last Friday in New Delhi, discussion took place regarding the formation of guidelines.
There will be a committee under the council headed by the RBI governor that will be first-level moderator of regulatory coordination. Guidelines will also decide that the council should hold minimum meetings during the year. However, the notification issued regarding FSDC suggests that the council should meet as frequent as possible.
A sub-committee or a steering committee headed by the governor can meet more frequently. This sub committee is in lieu of a high-level coordination committee, which is now dismantled.