Subbarao leads meeting of the FSDC Sub Committee

A meeting of the Sub-Committee of the Financial Stability Development Council (FSDC) was held today in Hyderabad. Dr. D. Subbarao, Governor, Reserve Bank of India and other officials, chaired the meeting.

The Sub-Committee reviewed the recent developments in the global economy, specifically in the Eurozone and the US and the consequences for India.

The concerns on slowing growth, persistent inflationary pressures, growing twin deficits and negative market perceptions were discussed. The concerns arising from the quantum of gold imports and their contribution to the current account deficit featured in the discussions.

The Sub-Committee decided to set up a Working Group to examine issues involved in framing a proposal for a comprehensive resolution regime in the country for all types of financial institutions, in compliance with the Financial Stability Board's (FSB) Key Attributes of Effective Resolution Regimes for financial institutions. The panel further discussed the extant gaps in the regulatory framework for Collective Investment Schemes and the need for the state governments to take the lead in plugging these gaps. It resolved to take forward the work on setting up a regulatory framework for Investment Advisory Services.

The functioning of the Technical Group for Financial Inclusion and Literacy and the Inter Regulatory Technical Group was also reviewed.

The Sub Committee took note of the present status of financial inclusion and suggested measures to deepen it further.The Sub Committee deliberated on and approved the National Strategy for Financial Literacy. The document will be placed in public domain for wider consultation, further added

The Sub Committee deliberated on the potential risks to financial stability flagged in the Financial Stability Report scheduled for release at the end of June 2012.

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