New Delhi [India], May 9 : Regulators should maintain a constant vigil as ensuring financial sector stability is a shared responsibility of the regulators, said Union finance minister Nirmala Sitharaman at the 27th meeting of the Financial Stability and Development Council (FSDC).
During the meeting held on Monday, Sitharaman said regulators must take appropriate and timely action to mitigate any vulnerability and strengthen financial stability.
Sitharaman chaired the 27th Meeting of the Financial Stability and Development Council (FSDC) for the first time after the announcement of the Budget 2023-24.
Notably, the meeting also took place just at a time when there have been strains in the US regional banks.
One of the most prominent lenders in the world of technology startups, Silicon Valley Bank, which was struggling, first collapsed on March 10, after a run on the bank by the depositors. Its closure led to a contagion effect and the subsequent shutting down of other banks, including Signature Bank and First Republic Bank. The collapse of a few regional banks in the US, which started with Silicon Valley Bank, has sent ripples across the global banking industry and posed fears of a contagion effect across economies.
During the meeting of the Council, it was discussed that the policy and legislative reform measures required to further develop the financial sector may be formulated and implemented expeditiously to not only increase the financial access of the people but also increase their overall economic well-being.
Further, asserting that regulators should adopt a focused approach to reduce the compliance burden further and ensure a streamlined and efficient regulatory environment, Sitharaman said she will review the progress achieved with each regulator in June 2023.
She also said the regulators need to be proactive and ensure cyber-security preparedness of the information technology systems to reduce the risk of cyber-attacks, protect sensitive financial data, and maintain overall system integrity.
Among other advice, she said regulators should conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, and insurance.
The meeting was attended by Union Ministers of State for Finance Pankaj Chaudhary and Bhagwat Kishanrao Karad, RBI governor Shaktikanta Das, and top finance ministry officials.
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