A meeting of the Sub Committee of the Financial Stability and Development Council (FSDC) was held today in Mumbai. Dr. D. Subbarao, Governor, Reserve Bank of India, chaired the meeting. The meeting was attended by Dr. Arvind Mayaram, Secretary, Department of Economic Affairs (DEA); Shri Rajiv Takru, Secretary, Department of Financial Services (DFS); Dr. Raghuram G Rajan, Chief Economic Adviser; Shri U. K. Sinha, Chairman, Securities and Exchange Board of India (SEBI); Shri Yogesh Agarwal, Chairman, Pension Fund Regulatory and Development Authority (PFRDA); Shri T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority (IRDA); Deputy Governors of RBI, Dr. K.C. Chakrabarty, Shri Anand Sinha, Shri H. R. Khan and Dr. Urjit R. Patel; Executive Director of RBI, Shri G. Gopalakrishna; and other officials.

The Sub Committee reviewed the potential risks to stability of the domestic financial system. The Sub Committee expressed concern on the deteriorating asset quality of public sector banks and discussed corrective measures in this regard. Proposals in respect of banks selling insurance products for more than one insurance company under the bancassurance model were discussed. The Sub Committee resolved to set up a forum for inter agency coordination and exchange of information about collective investment schemes and discussed the need for a nationwide awareness campaign in this respect. The Sub Committee discussed the potential impact on India of the extra-territorial aspects of regulations by European Securities and Markets Authority (ESMA) and US Commodity Futures Trading Commission (CFTC) and resolved to chalk out a unified strategy for the same.

The Sub Committee also reviewed the functioning of its Technical Groups set up for focused attention on different areas/segments on financial Inclusion, financial literacy and the inter regulatory coordination.

Alpana Killawala

Chief General Manager

Asset quality deterioration prompts coordinated regulatory action and a forum for oversight of collective investment schemes. Review of domestic financial stability risks highlighted deteriorating asset quality in public sector banks and considered corrective measures, along with proposals on bank distribution of insurance products under the bancassurance model. The Sub Committee resolved to create a forum for inter-agency coordination and information exchange on collective investment schemes, launch a nationwide awareness campaign, and develop a unified strategy to address the extraterritorial effects of foreign regulatory regimes, while reviewing Technical Groups on financial inclusion, literacy and inter-regulatory coordination.