Financial Stability Development Council (FSDC)

An apex level body, the FSDC, was set up by the GoI in December 2010. It was in line with the G-20 initiative which came in wake of the financial crises among the western economies triggered by the 2007–08 ‘sub-prime’ crisis of the USA. The Council has the following objectives:

(i) To strengthen and institutionalise the mechanism for maintaining financial stability,

(ii) To enhance inter-regulatory coordination, and

(iii) To promote financial-sector development.

The council is chaired by the Finance Minister and has heads of financial- sector regulatory authorities, the Finance Secretary and/or Secretary of the Department of Economic Affairs, Secretary of the Department of Financial Services, and the Chief Economic Adviser as members. Without prejudice to the autonomy of regulators, the Council monitors—

(i) macro-prudential supervision of the economy, including functioning of large financial conglomerates,

(ii) inter-regulatory coordination and financial-sector development issues, and

(iii) financial literacy and financial inclusion.

Financial Sector Assessment Programme (FSAP)

The IMF Board decided in September 2010, to include 25 systemically important economies, including India, under the Financial Stability Assessment Programme (FSAP) for members with systemically important financial sectors. The joint IMF-World Bank Financial Stability Assessment Programme (FSAP) was conducted for India in January 2013 which assessed Indian financial system in relation to the highest international standards. The assessment recognises that the Indian financial system remained largely stable on account of a sound regulatory and supervisory regime. However, the assessment identifies some gaps in18—

(i) International and domestic supervisory information sharing and co- operation;

(ii) Consolidated supervision of financial conglomerates; and

(iii) Some limits on the de jure independence of the regulators (RBI and IRDA).

Despite having reservations on few issues, overall the Indian authorities expect the FSAP exercise to play a significant role in shaping India’s post- crisis initiatives to strengthen the regulatory and supervisory architecture

based on the evolving international consensus as well as careful examination of their relevance in the India-specific context. As a member of the FSB19,

BCBS®20

and IMF21, India is actively participating in post-crisis reforms of the international regulatory and supervisory framework under the aegis of the G20. India remains committed to adoption of international standards and best practices, in a phased manner and calibrated to local conditions, wherever necessary, as it is a country characterised by complex and diverse socio- political and economic conditions.

Financial Action Task Force (FATF)

The FATF is an inter-governmental policy making body that has a ministerial mandate to establish international standards for combating money laundering and terrorist financing. India joined the FATF as its 34th member in June 2010. At present, the FATF has 36 members comprising 34 countries and two organisations (European Union and Gulf Cooperation Council).