Ensuring financial stability is a shared responsibility, says FM
New Delhi, May 9, 2023
The Finance Minister will review the progress achieved on this with each regulator in June, the statement said.
Regulators should maintain a constant vigil as ensuring financial sector stability is their ‘shared responsibility’, Finance Minister Nirmala Sitharaman said in the 27th meeting of the Financial Stability and Development Council (FSDC) held Monday.
The FSDC, which includes all financial market regulators as members, also discussed early warning indicators and the need to ensure cybersecurity preparedness of the information technology system to reduce the risk of cyber attacks, protect sensitive financial data, and maintain overall system integrity.
Economic Affairs Secretary Ajay Seth said that daunting challenges are coming from the global economy, but the Indian financial sector is well protected.
“…looking at the situation that’s developing in the US with the global banking crisis and the global challenge, the global financial situation is daunting, but at the same time, the Indian economy, especially the Indian financial sector, is well protected, well-regulated systems are there. But, at the same time, we have to be cautious and be on our toes as soon as early warning indicators are there. These are the set of indicators or an assessment of the economy before the stress assessment of the stress. The financial sector is stretched so that the stresses are noticed well in time for the corrective measures to be taken,” he said.
As per the latest Financial Stability Report released by the RBI in December last year, stress tests conducted by the central bank showed that Indian banks would be able to comply with the minimum capital requirements even under severe stress scenarios. Seth also said that with the financial sector becoming more digitised, a higher level of preparedness is needed for the cybersecurity of all regulated entities, especially the large regulated entities, systemically important financial institutions as well as financial market infrastructure.
The FSDC meeting was the first meeting held after the presentation of the Budget for 2023-24 and also the first to be held after the banking sector-related issues began in the US and Europe.
Sitharaman also asked the regulators to conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, insurance, etc., a finance ministry statement said.
She said that regulators should adopt a focused approach to reduce the compliance burden further and ensure a streamlined and efficient regulatory environment.
The Finance Minister will review the progress achieved on this with each regulator in June, the statement said.
[The Indian Express]
