Jaitley to chair FSDC meeting today even as RBI, govt lock horns in public

Finance Minister Arun Jaitley will chair the 20th meeting of the Financial Stability and Development Council on Tuesday. The FSDC is an apex body which also consists of chiefs and senior officials of all the financial sector regulators in India. There have been a number of flashpoints between the Centre and the Reserve Bank of India in the past one year, including on Rs 10 trillion worth of stressed assets in the books of banks, the Financial Resolution and Deposit Insurance Bill, the Punjab National Bank scam, the liquidity crisis in non-banking financial companies, the differences over prompt corrective action framework, the crisis in IL&FS and regulation of state-owned banks. These are some of the issues, affecting companies, investors and financial markets cutting across sectors, that the FSDC was set up to deal with in 2010. Apart from these, there is also the recent selloff in Indian equity and currency markets. The FSDC brings all financial sector regulators on one table to handle matters related to financial stability, inter-regulatory coordination, and financial sector development, as its own terms of reference notes. However, the latest meeting comes amid concerns about the role of the ‘super-regulator’. This assumes a greater importance at a time when it seems there’s a complete communication breakdown between the government and the central bank.

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