New Delhi: Finance Minister Nirmala Sitharaman reviewed Thursday here the state of the economy, including stress in the financial sector, at the meeting of the Financial Stability and Development Council (FSDC). The FSDC is the apex body of sectoral regulators, headed by the finance minister.
The 21st meeting of FSDC comes against the backdrop of the economy hitting a six-year low growth rate of five per cent in the first quarter of 2019-20. Even some of the macroeconomic data for the second quarter does not portray an encouraging picture of the economy.
Industrial output growth in August contracted by 1.1 per cent after a gap of 26 months. It reinforced fears of a slowing economy and deteriorating consumer sentiment. The output of eight core infrastructure industries also contracted by 5.2 per cent in September, indicating the severity of the economic slowdown.
“Broadly overall macro-economic issues and the state of the economy were discussed in details. There were some inter-regulatory issues which were also discussed. We also discussed about cyber-security issues that were one important component of the discussion,” Reserve Bank of India (RBI) Governor Shaktikanta Das told reporters after the meeting.
Going forward what kind of approach the regulators take on various issues particularly where there is inter-regulatory overlap was discussed, Shaktikanta said.
The current status of the NBFCs was also discussed, the RBI Governor informed. He added that there are a large number of NBFCs that are functioning well.
“Even today, we have quite a good number of NBFCs, a large number of NBFCs which are well-functioning, which are able to access funds from the market which are able to access loans from the banks, and in fact, some of them have got overseas funding also,” Shaktikanta Das added.
The RBI is very closely monitoring the top 50 NBFCs which represent roughly 75 per cent of the asset size of the NBFC sector.
This was the second meeting of the FSDC after the Modi 2.0 government assumed office.
Emerging out of the nearly two-hour meeting, Finance Secretary Rajiv Kumar said, “The meeting was very constructive and it took stock of entire financial system and other issues. When asked about the stress in the financial sector Kumar said that the RBI and other regulators are looking at it holistically.
According to sources, Financial Resolution and Deposit Insurance (FRDI) Bill was also discussed during the meeting.
Besides the RBI Governor, Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi, Insurance Regulatory and Development Authority of India (IRDAI) chairman Subhash Chandra Khuntia, Insolvency and Bankruptcy Board of India (IBBI) chairman MS Sahoo and Pension Fund Regulatory and Development Authority Ravi Mittal were present in the meeting.
PTI