FSDC Urges Vigilance Against Financial Risks From Geopolitical Uncertainty, AI Boom | Today’s news
Union Finance Minister Nirmala Sitharaman on Friday called for more frequent meetings of the Financial Stability and Development Council (FSDC), which reviewed emerging risks to India’s financial stability amid geopolitical uncertainties, the rise of artificial intelligence (AI) and a surge in global bond yields.
In its 30th meeting, chaired by Sitharaman in Delhi, the board emphasized the need for increased vigilance and proactive measures to mitigate potential risks while ensuring the resilience of the financial system, the finance ministry said in a statement.
The Council also discussed measures to support fintech innovation, explore tokenization of financial and other real-world assets, strengthen cyber resilience and deepen financial sector reforms.
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Citing growing “geopolitical headwinds and global uncertainty”, Sitharaman urged the council to meet at more frequent intervals with a pre-defined schedule, the ministry said. The FSDC is the peak coordination body for financial stability and development, bringing together key financial sector regulators and government representatives.
The meeting reviewed India’s readiness to address macro-financial stability concerns and discussed ways to strengthen coordination among financial sector regulators to support sector development.
Cyber security was a key topic, with the council taking note of the Financial Sector Cyber Security Strategy (FSCSS) formulated by an inter-departmental group of financial sector regulators and cyber security agencies in coordination with the Department of Economic Affairs (DEA), the Department of Financial Services (DFS) and the Ministry of Electronics and Information Technology (MeitY).
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The implementation of the strategy is expected to strengthen the overall resilience of the Indian financial sector. The discussion also covered readiness to protect critical information infrastructure, resilience of protection systems and cyber security readiness among regional rural banks.
The Council also discussed the implementation of earlier decisions and budget announcements, including measures to strengthen the domestic investment ecosystem and improve resource flows for investment, including through the Gujarat International Finance Tec-City International Financial Services Center (GIFT-IFSC).
Other priorities included simplification and digitization of know-your-customer (KYC) processes and digital onboarding for Non-Resident Indians (NRIs) and Foreign Portfolio Investors (FPIs) and expansion of Digital Public Infrastructure (DPI), especially the Account Aggregator and Unified Lending Interface (ULI) frameworks, with a focus on Micro, Small and Medium Enterprises (MS).
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The Council also discussed reducing the cost of financial intermediation, adapting regulations and rationalizing credit guarantee systems.
Sitharaman urged regulators and other stakeholders to expedite the return of unclaimed financial assets to their rightful owners. These include bank deposits, dividends, shares, post office accounts, insurance proceeds and pension funds.
The Council took note of the efforts under the ‘Your Money, Your Right’ campaign launched at the district level to return unclaimed financial assets. It asked the ministries and regulatory authorities to take further measures to ensure timely refunds to the rightful owners.
The meeting also reviewed the activities of the FSDC sub-committee chaired by the Governor of the Reserve Bank of India (RBI) and the status of action on pending decisions from previous board meetings.
The meeting was attended by RBI Governor Sanjay Malhotra; DEA Secretary Anuradha Thakur; DFS Secretary Sanjay Lohiya; Revenue Secretary Arvind Shrivastava; Secretary MeitY S. Krishnan; Corporate Affairs Secretary Pallavi Jain Govil; Chief Economic Adviser V. Anantha Nageswaran; Securities and Exchange Board of India Chairman Tuhin Kanta Pandey; Insurance Regulatory and Development Authority of India Chairman Ajay Seth; International Financial Services Center Authority Chairman K. Rajaraman; Chairman of the Office for Regulation and Development of Pension Funds S. Ramann; and Acting Chairman of the Insolvency and Bankruptcy Board of India Jayanti Prasad, among others.
