Govt, RBI set for face-off at FSDC meeting today

In the backdrop of the strained relations between the Union government and the Reserve Bank of India, Governor Urjit Patel is in the capital to attend a meeting of Financial Stability and Development Council (FSDC) on Tuesday.

The meeting is expected to deliberate on mounting NPAs in the public sector banks and the lack of power with the regulator to oversee these lenders. The government and the regulators are also expected to discuss the ways to make rules governing non-banking finance companies more effective.

Besides, cybersecurity, crypto-currencies and better management of financial products are on the agenda of the meeting that is being held within days of RBI deputy Governor Viral Acharya raising concerns over the lack of regulator’s autonomy hurting its functioning.

The members of the FSDC, which was constituted in December 2010, are the governor of the Reserve Bank of India, chief of Securities and Exchange Board of India, Finance Secretary, Department of Economic Affairs; secretary, financial services; secretary, chief economic adviser and chairpersons of the Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority.

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However, the government had recently amended the FSDC structure to include one of the two ministers of state for finance and two more bureaucrats. Revenue Secretary and IT secretary also part of the FSDC given the significance the government attaches to data privacy and digital transaction.

The latest addition in FSDC is the chairperson of the Insolvency and Bankruptcy Board of India. This is the second meeting after the super-regulator became executive-heavy following four amendments in its structure.

Since the meeting is being held amid a tense environment, senior Congress leader and former finance minister P Chidambaram has expressed the hope that the government and the central bank sit face-to-face to discuss issues “rather than talking to each other through lectures”.