'Better early warning signal mechanism needed to insulate economy from global shocks'

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IANS | 08 May, 2023
The Financial Stability and Development Council (FSDC) on Monday decided that a mechanism needs to be evolved to strengthen early warning signals, so that all kinds of financial stress can identified well in advance.

During the 27th meeting of the FSDC, presided over by Finance Minister Nirmala Sitharaman, it was noted that though the Indian economy is well insulated from global shocks and spillover effects of the prevailing geopolitical situation, there is a need to be cautious and therefore early warning signals mechanism needs to be evolved in order to be alert to any fiscal risks, sources privy to developments said.

It was also decided that all regulators should conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments.

Sitharaman directed that that all details related to unclaimed deposits need to be shared with nominees of depositors, the sources said.

Regulators were also asked to reach out to nominees of depositors for distributing unclaimed deposits like banking deposits, shares and dividends, mutual funds and other such instruments.

This was the first meeting of the FSDC after presentation of the union Budget for 2023-24.

The FSDC, headed by the Finance Minister, comprises financial sector regulators.

Sitharaman advised the regulators that they should adopt a focussed approach to reduce the compliance burden further and ensure a streamlined regulatory environment.

She further directed that regulators should maintain a constant vigil as ensuring "financial sector stability is a shared responsibility" of the regulators.

Regulators must take appropriate and timely action to mitigate any vulnerability and strengthen financial stability, the Finance Minister stated during the meeting.

The regulators need to be proactive and ensure cyber-security preparedness of the information technology systems to reduce the risk of cyber-attacks, protect sensitive financial data, and maintain overall system integrity, thus safeguarding the stability and resilience of the Indian financial ecosystem, the council decided.

The council also deliberated debt levels of corporates and households in the country, simplification and streamlining of KYC framework to meet the needs of digital India, as well as seamless experience for retail investors in government securities.

The meeting was attended by Ministers of State for Finance Pankaj Chaudhary and Bhagwat Karad, RBI Governor Shaktikanta Das, Finance Secretary T.V. Somanathan, Economic Affairs Secretary Ajay Seth, Banking Secretary Vivek Joshi, Revenue Secretary Sanjay Malhotra and chief economic adviser V. Anantha Nageswaran.

Apart from these, SEBI chief Madhabi Puri Buch, IRDAI Chairperson Debasish Panda and PFRDA Chairman Deepak Mohanty were also present in the meeting.