Finance Minister Nirmala Sitharaman on Thursday chaired a meeting of the Financial Stability and Development Council (FSDC) as it reviewed the global and macro-economic situation along with financial stability and the issues faced by banks.
The Council during the video conference also discussed market volatility, domestic resource mobilisation and capital flows issues, said an official statement.
“The meeting reviewed the current global and domestic macro-economic situation, financial stability and vulnerabilities, major issues likely to be faced by banks and other financial institutions as also regulatory and policy responses, liquidity/solvency of NBFCs/HFCs/MFIs and other related issues.” It said.
The FM-led council in its 22nd meeting also noted that the COVID-19 pandemic crisis poses a serious threat to the stability of the global financial system as the ultimate impact of the crisis and the timing of recovery is uncertain at this point of time.
It observed that while decisive monetary and fiscal policy actions aimed at containing the fallout from the pandemic, have stabilised investor sentiment in the short-run, there is a need to keep a continuous vigil by the government and all regulators on the financial conditions that could expose financial vulnerabilities in the medium and long-term.
The meeting was attended by Shaktikanta Das, Governor, Reserve Bank of India, SEBI Chairperson Ajay Tyagi, IRDAI Chairman Subhash Chandra Khuntia, PFRDA Chairperson Supratim Bandyopadhyay, and the Chairperson of the Insolvency and Bankruptcy Board of India M.S. Sahoo Chairperson, (IBBI) among other officials and secretaries of the Finance Ministry.
The council also took note of the initiatives taken by the government and the regulators in the recent months to help revive the economy. The government and the RBI have announced various fiscal and monetary measures to pre-emptively limit the economic damage and would continue to address the liquidity and capital requirements of the financial institutions.
The Council also reviewed the action taken by members on the decision taken by FSDC earlier.
The meeting comes in the backdrop of the government announcing an economic package and the economy facing a severe blow due to the coronavirus pandemic and the nationwide lockdown. The Reserve Bank of India also last week predicted a negative growth in India’s GDP for the financial year 2020-21.