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FSDC says India needs to remain prepared to deal with external sector vulnerability

By:  Amit ( Source: ET) , Place:  New Delhi ,  Update:06 Nov 2015

India should remain in a state of "full preparedness" to deal with any external sector vulnerability, a high-level committee that regularly monitors the country's financial sector has decided. 

The Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley, met on Thursday to discuss the situation after the US Federal Reserve indicated it may raise interest rates in December. "The council noted that high volatility in the financial markets is one of the most prominent risks confronting the Emerging Market Economies (EMEs)," the FSDC concluded, a statement from finance ministry said. 

As per the statement, the "members agreed on the need to continue to be in a state of full preparedness for managing any external sector vulnerabilities". It said India is "much better placed today on the back of improvement in its macroeconomic fundamentals and large forex reserves, which provide cushion against financial market volatility". 

Apart from the finance minister, the meeting was attended by the Minister of State for Finance Jayant Sinha, RBI Governor Raghuram Rajan, Finance Secretary Ratan P Watal, Department of Economic Affairs Secretary Shaktikanta Das, Secretary of Department of Financial Services Anjuly Chib Duggal, Revenue Secretary Hasmukh Adhia, Chief Economic Adviser Arvind Subramanian, Sebi Chairman UK Sinha, IRDA Chairman TS Vijayan and PFRDA Head Hemant G Contractor. 

The FSDC discussed the rising bad loans of the banking sector, the statement said, and the impact of non-performing assets of banks and corporate sector balance sheet stress on bond market.

India should remain in a state of "full preparedness" to deal with any external sector vulnerability, a high-level committee that regularly monitors the country's financial sector has decided. 

The Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley, met on Thursday to discuss the situation after the US Federal Reserve indicated it may raise interest rates in December. "The council noted that high volatility in the financial markets is one of the most prominent risks confronting the Emerging Market Economies (EMEs)," the FSDC concluded, a statement from finance ministry said. 

As per the statement, the "members agreed on the need to continue to be in a state of full preparedness for managing any external sector vulnerabilities". It said India is "much better placed today on the back of improvement in its macroeconomic fundamentals and large forex reserves, which provide cushion against financial market volatility". 

Apart from the finance minister, the meeting was attended by the Minister of State for Finance Jayant Sinha, RBI Governor Raghuram Rajan, Finance Secretary Ratan P Watal, Department of Economic Affairs Secretary Shaktikanta Das, Secretary of Department of Financial Services Anjuly Chib Duggal, Revenue Secretary Hasmukh Adhia, Chief Economic Adviser Arvind Subramanian, Sebi Chairman UK Sinha, IRDA Chairman TS Vijayan and PFRDA Head Hemant G Contractor. 

The FSDC discussed the rising bad loans of the banking sector, the statement said, and the impact of non-performing assets of banks and corporate sector balance sheet stress on bond market.

The council was briefed on the status of various financial sector reforms - PDMA (Public Debt Management Agency), FSAT (Financial Sector Appellate Tribunal), FDMC (Financial Data Management Centre) and Resolution Corporation. 

"On PDMA, the process of inter-ministerial consultations is underway. On FSAT, it is proposed to strengthen the tribunal by providing for more benches. On FDMC, to begin with, it is proposed to set up a body which would assist FSDC in decision-making. As for Resolution Corporation, it is proposed to set up the body in consultation with all stakeholders," the finance ministry said. 

 
 
 
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