The high-level the Financial Stability and Development Council (FSDC), headed by the finance minister has discussed interest rates and liquidity issue faced by the non-banking financial companies (NBFCs). The meeting assumes importance as the FSDC was meeting for the first time after RBI Deputy Governor Viral Acharya raised the issues regarding the independence of the central bank.
Reserve Bank Governor Urjit Patel has said that the liquidity problem in NBFCs is not as severe as was being projected, but assured the government that the central bank would ensure adequate liquidity in the system. He also informed the government that there is no liquidity crunch in the system, barring certain sectors and assured they are keeping a close watch on the financial sector. The government, on its part, asked the RBI to prevent spreading of IL&FS crisis to other sectors of the economy. Among other things, the issue regarding cyber-security in financial markets also came up for discussion. The meeting also deliberated on the need for identifying and securing critical information infrastructure in financial sector.
The FSDC comprises Reserve Bank Governor, Sebi Chairman, and heads of other regulators like PFRDA, IRDAI, and also Chairman of the Insolvency and Bankruptcy Board (IBBI). It was set up to strengthen and institutionalise the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.